Should I pile into Harry Potter publisher Bloomsbury as the stock hits an 11-year high?

Decent full-year results today from Bloomsbury Publishing (LSE: BMY) go a long way towards supporting the Harry Potter publisher's ambitions to expand. Revenue for the trading year to 28 February came in 13% higher than the year before and 63% of that revenue was generated overseas. Non-UK revenue expanded by 16% during the year, which is a sign that the firm is making good progress abroad.

Meanwhile, adjusted diluted earnings per share moved 10% higher, net cash pile shot up almost 64% to a little over £25m, and the directors topped things off by pushing up total dividend for the year by 12%. The figures suggest to me that Bloomsbury's growth drive is based on sound financial outcomes and is not, for example, profitless growth in turnover as we see from some other firms.

Bloomsbury is blooming

The directors' ambitions are clear. They want to build a "bigger Bloomsbury". The global strategy includes "accelerating" sales growth in the US, Australia and India, and "developing" Bloomsbury China, which involves publishing books in English in the west for "major Chinese publishers."

The directors also plan to focus Bloomsbury's "nine biggest assets" such as Harry Potter, Sarah J Mass, Tom Kerridge and the lead titles from the US and UK editorial lists "to boost frontlist and backlist performance." The directors think such growth initiatives will work alongside the May acquisition of London-based academic publisher IB Tauris & Co to deliver a performance for 2019/20 onwards, "well ahead" of their previous expectations. That's music to the ears of investors whenever we hear it.

Both the firm's consumer and non-consumer divisions performed well during the year, producing decent revenue growth figures. Chief executive Nigel Newton said in the report: "It has been a great year that has put Bloomsbury in a very strong and exciting position."

The stock is moving

The stock is responding well to the improved outlook. At today's 222p, the share price is some 24% higher than it was on 10 May and has broken above its previous 11-year trading range. That fact alone puts the firm on my radar because it suggests real progress in the underlying business. City analysts following Bloomsbury expect earnings to decline 5% in the current year and to rise around 18% during the trading year to February 2020.

Even at today's level, the share price throws up a decent forward dividend yield of around 3.5%, which is handy income to collect while we wait for the growth story to unfold. Forward earnings should cover the payment around twice and the forward price-to-earnings ratio for the trading year to February 2020 is just over 14, which seems fair given the firm's recent progress. If the firm continues to make progress with overseas sales, we could see cash inflows and earnings driving the share price higher in the years to come, which could combine with rising dividends to produce a good total return for patient buy-and-hold investors. As the new growth story emerges, I think Bloomsbury is tempting right now and I'm going to watch closely with a view to buying some of the firm's shares on dips and down-days.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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