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New York Times (NYT) Up 7.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for New York Times Co. (NYT - Free Report) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is New York Times due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NY Times Q4 Earnings Top, Subscription Revenues Up Y/Y
The New York Times Company posted fourth-quarter 2021 results, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Subscription revenues rose during the quarter. Both print and digital advertising revenues showcased an increase from the year-ago period.
The company delivered adjusted earnings from continuing operations of 43 cents a share that beat the Zacks Consensus Estimate of 35 cents and improved 7.5% from the prior-year reported figure. Total revenues of $594.2 million surpassed the Zacks Consensus Estimate of $580.9 million and surged 16.7% year over year buoyed by robust digital subscription and advertising revenues.
The New York Times Company’s digital subscriber base has been increasing, and with the acquisition of The Athletic, it attained the goal of 10 million subscriptions well ahead of 2025. Management also highlighted that it plans to promote a high-value New York Times bundled digital subscription, and is aiming at least 15 million subscribers to The Times by the end of 2027. The company notified that from the first quarter of 2022 it will start reporting the number of unique subscribers, while continuing to also report on individual subscription growth.
Subscription Revenues Rise
Subscription revenues improved 11.2% to $351.2 million primarily due to increase in the number of subscriptions to the company’s digital-only products, which include News product, and Games, Cooking, Audm and Wirecutter, as well as a benefit from subscriptions graduating to higher prices from introductory promotional pricing. Revenues from digital-only products jumped 23.1% to $205.5 million. Print subscription revenues fell 2.1% to $145.7 million due to lower domestic home delivery revenues and lesser single-copy revenues.
The company ended the quarter with approximately 8,789,000 paid subscriptions across its print and digital products. It added 375,000 net new digital subscriptions compared with the end of the third quarter of 2021. Of the total subscription net additions, 171,000 came from the digital news product, while the remaining came from other digital-only products.
Management envisions first-quarter 2022 total subscription revenues to increase about 9-11%, while digital-only subscription revenues are anticipated to surge approximately 18-21%. Including, The Athletic, total subscription revenues are expected to increase 11-15% and digital-only subscription revenues are projected to improve 23-28%.
Advertising Revenues Grow
Total advertising revenues were $176.8 million in the reported quarter, up 26.9% year over year.
Print advertising revenues surged 33.6% to $65.6 million in the quarter under review. The metric increased mainly in the luxury and entertainment categories, which were significantly hurt in the year-ago period owing to the pandemic.
Digital advertising revenues soared 23.3% to $111.1 million. This year-over-year increase can primarily be attributed to higher direct-sold advertising, including traditional display and podcasts.
The New York Times Company expects an increase of 16-20% in total advertising revenues and 18-22% in digital advertising revenues for first-quarter 2022. Including, The Athletic, it guided a rise of 17-21% in total advertising revenues and 20-24% in digital advertising revenues.
Other Highlights
We note that other revenues grew 22.1% to $66.3 million during the quarter under review due to live events as well higher commercial printing and television series revenues. Management anticipates other revenues to jump approximately 15-20% in first-quarter 2022.
Adjusted operating costs rose 17.8% to $484.9 million during the quarter. Management anticipates adjusted operating costs to increase approximately 13-15% in first-quarter 2022, as the company continues to invest in the drivers of digital subscription growth. Including, The Athletic, adjusted operating costs are expected to increase 18-22%.
Total adjusted operating profit grew 12% to $109.3 million during the quarter under review. Higher subscription, advertising and other revenues more than offset increase in adjusted operating costs.
Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $1.07 billion, reflecting an increase of $188 million from $882 million as of Dec 27, 2020. The company informed that subsequent to the fiscal year end about $550 million was utilized to fund the buyout of The Athletic.
The company has a $250 million revolving line of credit through 2024. As of Dec 26, 2021, the company had neither outstanding borrowings under the credit facility nor other outstanding debt obligations. It incurred capital expenditures of about $9 million during the quarter. Management envisions capital expenditures of about $50 million in 2022.
The company’s board of directors declared a dividend of 9 cents a share. This reflects an increase of 2 cents from the preceding quarter. The dividend is payable on Apr 21, 2022, to shareholders of record as of the close of business on Apr 6, 2022. The board of directors also authorized a $150 million share repurchase program that replaces an existing authorization under which approximately $16.2 million remained.
Wrapping Up
The New York Times Company has been diversifying business and adding new revenue streams. Its acquisition of Wordle, the popular daily word game, strengthens game portfolio. The company has also been keeping pace with the changing times by utilizing technological advancements to reach their target audience more effectively. Notably, the company’s business model with greater emphasis on subscription revenues bodes well.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -25% due to these changes.
VGM Scores
Currently, New York Times has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise New York Times has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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New York Times (NYT) Up 7.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for New York Times Co. (NYT - Free Report) . Shares have added about 7.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is New York Times due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
NY Times Q4 Earnings Top, Subscription Revenues Up Y/Y
The New York Times Company posted fourth-quarter 2021 results, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Subscription revenues rose during the quarter. Both print and digital advertising revenues showcased an increase from the year-ago period.
The company delivered adjusted earnings from continuing operations of 43 cents a share that beat the Zacks Consensus Estimate of 35 cents and improved 7.5% from the prior-year reported figure. Total revenues of $594.2 million surpassed the Zacks Consensus Estimate of $580.9 million and surged 16.7% year over year buoyed by robust digital subscription and advertising revenues.
The New York Times Company’s digital subscriber base has been increasing, and with the acquisition of The Athletic, it attained the goal of 10 million subscriptions well ahead of 2025. Management also highlighted that it plans to promote a high-value New York Times bundled digital subscription, and is aiming at least 15 million subscribers to The Times by the end of 2027. The company notified that from the first quarter of 2022 it will start reporting the number of unique subscribers, while continuing to also report on individual subscription growth.
Subscription Revenues Rise
Subscription revenues improved 11.2% to $351.2 million primarily due to increase in the number of subscriptions to the company’s digital-only products, which include News product, and Games, Cooking, Audm and Wirecutter, as well as a benefit from subscriptions graduating to higher prices from introductory promotional pricing. Revenues from digital-only products jumped 23.1% to $205.5 million. Print subscription revenues fell 2.1% to $145.7 million due to lower domestic home delivery revenues and lesser single-copy revenues.
The company ended the quarter with approximately 8,789,000 paid subscriptions across its print and digital products. It added 375,000 net new digital subscriptions compared with the end of the third quarter of 2021. Of the total subscription net additions, 171,000 came from the digital news product, while the remaining came from other digital-only products.
Management envisions first-quarter 2022 total subscription revenues to increase about 9-11%, while digital-only subscription revenues are anticipated to surge approximately 18-21%. Including, The Athletic, total subscription revenues are expected to increase 11-15% and digital-only subscription revenues are projected to improve 23-28%.
Advertising Revenues Grow
Total advertising revenues were $176.8 million in the reported quarter, up 26.9% year over year.
Print advertising revenues surged 33.6% to $65.6 million in the quarter under review. The metric increased mainly in the luxury and entertainment categories, which were significantly hurt in the year-ago period owing to the pandemic.
Digital advertising revenues soared 23.3% to $111.1 million. This year-over-year increase can primarily be attributed to higher direct-sold advertising, including traditional display and podcasts.
The New York Times Company expects an increase of 16-20% in total advertising revenues and 18-22% in digital advertising revenues for first-quarter 2022. Including, The Athletic, it guided a rise of 17-21% in total advertising revenues and 20-24% in digital advertising revenues.
Other Highlights
We note that other revenues grew 22.1% to $66.3 million during the quarter under review due to live events as well higher commercial printing and television series revenues. Management anticipates other revenues to jump approximately 15-20% in first-quarter 2022.
Adjusted operating costs rose 17.8% to $484.9 million during the quarter. Management anticipates adjusted operating costs to increase approximately 13-15% in first-quarter 2022, as the company continues to invest in the drivers of digital subscription growth. Including, The Athletic, adjusted operating costs are expected to increase 18-22%.
Total adjusted operating profit grew 12% to $109.3 million during the quarter under review. Higher subscription, advertising and other revenues more than offset increase in adjusted operating costs.
Financial Aspects
The New York Times Company ended the quarter with cash and marketable securities of about $1.07 billion, reflecting an increase of $188 million from $882 million as of Dec 27, 2020. The company informed that subsequent to the fiscal year end about $550 million was utilized to fund the buyout of The Athletic.
The company has a $250 million revolving line of credit through 2024. As of Dec 26, 2021, the company had neither outstanding borrowings under the credit facility nor other outstanding debt obligations. It incurred capital expenditures of about $9 million during the quarter. Management envisions capital expenditures of about $50 million in 2022.
The company’s board of directors declared a dividend of 9 cents a share. This reflects an increase of 2 cents from the preceding quarter. The dividend is payable on Apr 21, 2022, to shareholders of record as of the close of business on Apr 6, 2022. The board of directors also authorized a $150 million share repurchase program that replaces an existing authorization under which approximately $16.2 million remained.
Wrapping Up
The New York Times Company has been diversifying business and adding new revenue streams. Its acquisition of Wordle, the popular daily word game, strengthens game portfolio. The company has also been keeping pace with the changing times by utilizing technological advancements to reach their target audience more effectively. Notably, the company’s business model with greater emphasis on subscription revenues bodes well.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -25% due to these changes.
VGM Scores
Currently, New York Times has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise New York Times has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.