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Will NY Times (NYT) Disappoint This Earnings Season?

NYT TWX HBI KAR

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The New York Times Company (NYT - Analyst Report) is set to report third-quarter 2013 results on Oct 31, before the market opens. Last quarter, it posted a 16.7% positive surprise. Let’s see how things are shaping up for this announcement.

Growth Factors this Past Quarter

New York Times posted better-than-expected second-quarter results on the back of favorable response to the digital subscription packages, increase in circulation revenues and effective cost management. However, these failed to offset the diminishing advertising revenues, which recorded a sequential improvement. To mitigate this, the company is diversifying its business and adding new revenue streams. The company is also streamlining the cost structure, strengthening the balance sheet and restructuring its portfolio. The company is offloading assets that bear no direct relation to the core operations in order to re-focus on its core newspapers and pay more attention to its online activities.

Earnings Whispers?

Our proven model does not conclusively show that New York Times is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  ESP for New York Times is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 4 cents.

Zacks Rank. The New York Times Company’s’ Zacks Rank #4 (Sell) lowers the predictive power of ESP because the Zacks Rank #4 when combined with an ESP of 0.00% makes surprise prediction difficult. We caution against stocks with Zacks #4 and 5 Ranks (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:  

Hanesbrands Inc. (HBI - Analyst Report), with Earnings ESP of +7.02% and a Zacks Rank #1 (Strong Buy).

KAR Auction Services, Inc. (KAR - Snapshot Report), with Earnings ESP of +14.82% and a Zacks Rank #2 (Buy).

Time Warner Inc. (TWX - Analyst Report), with Earnings ESP of +1.12% and a Zacks Rank #3 (Hold).

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