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Diversification Strategy to Aid NY Times (NYT) Q3 Earnings

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The New York Times Company (NYT - Free Report) , a diversified media conglomerate, is slated to report third-quarter 2017 results on Nov 1. In the trailing four quarters, it has outperformed the Zacks Consensus Estimate by an average of 43.1%. In the preceding quarter, the company witnessed a positive earnings surprise of 38.5%. Investors are keeping their fingers crossed and hoping that the company surpasses earnings estimate even this time. Let’s delve deep and find out the factors impacting the results.

Strategies on Track, Ad Revenue a Concern

The New York Times Company is diversifying business, adding new revenue streams, strengthening balance sheet and restructuring portfolio. It has offloaded assets in order to re-focus on core newspapers and pay more attention to its online activities. The company has been adding diverse revenue streams, such as a pay-and-read model, to stay less vulnerable to economic conditions. It is not only gearing up to become an optimum destination for news and information but is also now focusing on service journalism, with verticals like Cooking, Watching and Well.

The New York Times Company has been struggling with dwindling advertising revenues for quite some time now. Analysts pointed that increasing online readership has made the print-advertising model redundant. Print advertising revenue fell 10.5% in the second quarter of 2017, following a decline of 17.9% in the preceding quarter. Although, total advertising revenue increased marginally by 0.8% during the second quarter, the company hinted that it is likely to decline in the mid to high-single digits in the third quarter.

How are Estimates Shaping Up?

The New York Times Company’s diversification strategy to counter dwindling advertising revenues is likely to have a favorable impact on the top and bottom lines. Analysts polled by Zacks expect third-quarter revenue to be $388 million, up 6.7% from the year-ago quarter. However, we note that the rate of growth is likely to decelerate from 9.2% registered in the preceding quarter. Meanwhile, earnings are projected to surge 50% year over year in the quarter, following an increase of 63.6% in the preceding quarter. Being stable in the last 30 days, the Zacks Consensus Estimate is currently pegged at 9 cents, up from 6 cents reported in the year-ago period.

New York Times Company (The) Price, Consensus and EPS Surprise

 

New York Times Company (The) Price, Consensus and EPS Surprise | New York Times Company (The) Quote

What Does the Zacks Model Say?

Our proven model does not conclusively show that The New York Times Company is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The New York Times Company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 9 cents. The company’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Stocks with Favorable Combination

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

Activision Blizzard, Inc. has an Earnings ESP of +5.80% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Discovery Communications, Inc. has an Earnings ESP of +0.46% and a Zacks Rank #3.

Scripps Networks Interactive, Inc. has an Earnings ESP of +5.10% and a Zacks Rank #3.

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