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Factors Setting the Tone for NY Times' (NYT) Q4 Earnings

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The New York Times Company (NYT - Free Report) is likely to register a marginal increase in the top line, when it reports fourth-quarter 2020 numbers on Feb 4, before the market opens. The Zacks Consensus Estimate for revenues is pegged at $510.5 million, indicating a marginal improvement of 0.4% from the prior-year reported figure.

However, the bottom line of this diversified media conglomerate is expected to decline year over year. The Zacks Consensus Estimate for earnings for the quarter under review has been stable at 39 cents over the past 30 days. The figure suggests a decline from 43 cents reported in the year-ago quarter.

Notably, the company has a trailing four-quarter earnings surprise of 90.1%, on average. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by a significant margin.

Factors to Note

The New York Times Company has been grappling with declining print readership and soft advertising revenues for quite some time now. Readers’ preference for accessing news online has made the print-advertising model increasingly redundant. Also, the ongoing pandemic has compelled industries across the board to curtail marketing expenditures.

Management on its last earnings call guided a decline of approximately 30% in total advertising revenues for the quarter to be reported, primarily due to the impact of the coronavirus. Additionally, the company projected mid-teens decline in digital advertising revenues.

Nonetheless, the company has been making concerted efforts to lower dependency on traditional advertising and focus on digitization. It has been diversifying business, adding new revenue streams, realigning cost structure and streamlining operations to increase efficiencies. The company has not only been gearing up to become an optimum destination for news and information but also has been focusing on lifestyle products and services.

Undeniably, the company has been keeping pace with the changing times by utilizing technological advancements to reach their target audience more effectively. The company’s business model with greater emphasis on subscription revenues positions it to mitigate the impact of the ongoing pandemic to an extent. We note that management had earlier forecast an increase of approximately 14% in total subscription revenues and a jump of about 35% in digital-only subscription revenues for the fourth quarter.

Additionally, management projected adjusted operating costs to be flat or down in the low-single digits as the company defers non-essential spending, while continuing to invest in digital subscription business.

The New York Times Company Price, Consensus and EPS Surprise

The New York Times Company Price, Consensus and EPS Surprise

The New York Times Company price-consensus-eps-surprise-chart | The New York Times Company Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for The New York Times Company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Although The New York Times Company carries a Zacks Rank #2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

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

News Corporation (NWSA - Free Report) has an Earnings ESP of +5.88% and a Zacks Rank of #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox Corporation (FOXA - Free Report) has an Earnings ESP of +145.46% and a Zacks Rank of #2.

Lions Gate Entertainment (LGF.A - Free Report) has an Earnings ESP of +63.63% and a Zacks Rank of #3.

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