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Soft Advertising Revenues May Hurt NY Times (NYT) Q3 Earnings

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The New York Times Company NYT is scheduled to report third-quarter 2019 financial numbers on Nov 6, before the opening bell. In the preceding four quarters, this diversified media conglomerate outperformed the Zacks Consensus Estimate by average of 21.5%. In the last reported quarter, the company delivered negative earnings surprise of 10.5%.

The Zacks Consensus Estimate for third-quarter earnings is currently pegged at 11 cents, which indicates a decline of 26.7% from the year-ago quarter’s reported figure. We note that the Zacks Consensus Estimate has remained stable in the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $429.8 million, suggesting growth of about 3% from the prior-year period. We note that the top line had improved 5.2% in the last reported quarter.

Factors at Play

The New York Times Company has been coping with soft print advertising revenues due to increasing online readership, a trend that is likely to have continued in the third quarter. In the last earnings call, management guided a high single-digit decline in total advertising revenues for the to-be-reported quarter.

Further, management had cautioned that the second half of 2019 is likely to be challenging for digital advertising as a result of comparisons against sturdy performance in the prior-year period. The company envisioned a high single-digit decline in digital advertising revenues for the third quarter.

Moreover, this New York-based company anticipated adjusted operating costs increase of 8-10% for the quarter under review. This is likely to get reflected in the bottom-line number.

Nonetheless, The New York Times Company has been contemplating new avenues of revenue generation in a bid to counter dwindling print advertising revenues. Rapid digitization in the core areas of advertising, subscriptions and sales, printing, and distribution services has turned out to be a major source of revenues. The company has been focusing on online activities, as evident from its pay-and-read model.

Notably, the number of paid digital subscribers reached roughly 3,780,000 at the end of second quarter of 2019 – improving 197,000 sequentially and 30.7% year over year. Subscription revenues grew 3.8% during the last reported quarter due to increase in the number of subscriptions to the company’s digital-only products. Revenues from digital-only subscriptions products jumped 14.1%.

Management projected low to mid-single digit increase in total subscription revenues and mid-teens growth in digital-only subscription revenues for the third quarter.

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 doesn’t 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.

The New York Times Company carries a Zacks Rank #4 (Sell) and 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

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AutoZone (AZO - Free Report) has an Earnings ESP of +0.77% and a Zacks Rank #3.

Target TGT has an Earnings ESP of +5.62% and a Zacks Rank #3.

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