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Analyst Blog

On Feb 12, 2014, we issued an updated research report on The New York Times Company (NYT - Analyst Report). The company recently reported better-than-expected quarterly results and the underlying factors are capable of carrying the momentum further.

Estimates for The New York Times Company have shown an uptrend since the company reported fourth-quarter 2013 results. The company posted earnings of 26 cents a share that surpassed the Zacks Consensus Estimate of 16 cents. The quarter reflects favorable response to the digital subscription packages, increase in circulation revenue (excluding the extra week in the fourth quarter of 2012) and effective cost management.

This is the third consecutive quarter that The New York Times Company has outpaced the Zacks Consensus Estimate. In the second, third and fourth quarters it posted positive earnings surprise of 16.7%, 75% and 62.5%, respectively. In the trailing four quarters it has surpassed the Zacks Consensus Estimate by an average of 33.5%.

The New York Times Company’s top line of $443.9 million came ahead of the Zacks Consensus Estimate of $440 million. Excluding the extra week in the fourth quarter of 2012, total revenue rose 0.4%, while circulation revenue climbed 2.7%. Management now expects total circulation revenue to jump in the low single digits in the first quarter of 2014, gaining from digital subscription initiatives and increase in print home-delivery price.

The New York Times Company, which competes with Gannett Co. Inc. (GCI - Analyst Report), has been adding diverse revenue streams, which include a pay-and-read model, to make it less vulnerable to the economic conditions. The company is also adapting to the changing face of the multiplatform media universe, which currently includes mobile, social media networks and reader application products in its portfolio. The company has also been offloading its assets to better position itself and focus on core areas.

The better-than-expected results triggered an upward revision in the Zacks Consensus Estimates, as analysts become more constructive on the stock’s future performance. This is evident from the movement witnessed in the Zacks Consensus Estimate that increased 7.9% to 41 cents for fiscal 2014 and 36.4% to 45 cents a share for fiscal 2015 in the past 7 days.

The New York Times Company currently carries a Zacks Rank #2 (Buy).

Stocks That Warrant a Look

Other better ranked stocks worth considering include, Tribune Company holding a Zacks Rank #1 (Strong Buy) and Reed Elsevier plc (RUK - Snapshot Report) carrying a Zacks Rank #2 (Buy).

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