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Gannett Co., Inc. (GCI - Analyst Report) is diversifying its business model by adding new revenue streams in an effort to adapt to the changing face of the multiplatform media universe. These endeavors have helped this media conglomerate to attain a new 52-week high of $20.12 on Tuesday, before closing at $20.04. Moreover, shares of this Zacks Rank #3 (Hold) company have generated a solid return of approximately 38.2% in the last one year.

Drivers that Triggered Momentum

Gannett is poised to benefit from a rapidly changing business model, like increasing digitalization, in order to keep itself on the growth path. The company’s long-term objective is to attain revenue growth of 2% to 4% annually.

The company is focusing on its subscription-based model and Digital Marketing Services products. Apart from Gannett, other media giants like News Corporation (NWSA - Analyst Report) and The New York Times Company (NYT - Analyst Report), have taken a leap toward an online subscription-based model for general news content.

Going forward, Gannett expects subscription revenue for the U.S. Community Publishing division to increase by 25% by the end of 2013, which would translate into a contribution of approximately $100 million to operating profit.

For 2012, company-wide digital revenue is projected to advance 19% year over year to $1.3 billion, whereas retransmission revenue is expected to jump 20% to $96 million. Retransmission consent fees for 2013 are expected between $135 million and $140 million, reflecting an advancement of over 40% from the 2012 level.

Gannett projects total revenue growth of over 5% and earnings between 87 cents to 88 cents per share for the fourth quarter of 2012. The company has surpassed the Zacks Consensus Estimate in 8 of the past 10 quarters. The average surprise for the period was 4.6%.

Stock’s Key Indicators 

From the valuation perspective, Gannett currently trades at a forward P/E of 8.85x, well above the peer group average of 16.03x. Moreover, the company’s return-on-equity (ROE) and return-on-asset (ROA) of 20.1% and 7.9%, respectively, are higher than the peer group averages.

Other Stocks to Consider

Until any further upward revision in Gannett’s rating, other media and publishing companies worth considering include The E. W. Scripps Company (SSP - Snapshot Report) and News Corporation, which hold a Zacks Rank #1 (Strong Buy) and a Zacks Rank #2 (Buy), respectively.

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