Gannett Company, Inc.
), the publisher of one of the country's largest-selling daily
, and an S&P 500 company, is scheduled to report its
first-quarter 2012 financial results before the market opens on
Monday, April 16, 2012.
The current Zacks Consensus Estimate for the quarter is 31 cents
a share, which reflects a decline of 24.4% from the prior-year
quarter's earnings. The estimates in the current Zacks Consensus
range between a low of 29 cents and a high of 33 cents a share. The
Zacks Consensus estimates revenue at $1,240 million for the first
Recap of Fourth-Quarter 2011
On January 30, 2012, Gannett delivered fourth-quarter 2011
results. The quarterly earnings of 72 cents a share beat the Zacks
Consensus Estimate of 69 cents, but dropped 13.3% from last year's
83 cents, reflecting a slump in publishing and political
advertising demand as well as a marginal fall in circulation
revenue. However, effective cost management provided some cushion
to the bottom-line.
Gannett's total revenue dropped 5.1% to $1,387.8 million from
the prior-year quarter due to fall in revenue across Publishing and
Broadcasting segments, partially offset by gain at Digital segment.
Total revenue also fell short of the Zacks Consensus Estimate of
(Refer the article:
Gannett Beats, Profit Dips
Zacks Agreement & Magnitude
Of the nine analysts following the stock, only one analyst has
revised the estimate downwards in the last 30 days, thereby pulling
down the Zacks Consensus Estimate by a couple cents. In the last 7
days, none of the analysts revisited their estimates, thereby
keeping the Zacks Consensus Estimate constant at 31 cents.
Mixed Earnings Surprise History
With respect to earnings surprises, Gannett has missed as well
as topped the Zacks Consensus Estimate over the last four quarters
in the range of negative 2.4% to positive 4.4%. The average
remained at positive 0.4%. This suggests that Gannett has beaten
the Zacks Consensus Estimate by an average of 0.4% in the trailing
Since its last earnings release on January 30, 2011, Gannett's
market price has increased 7.8% to $15.07 as of April 12, 2012.
During trading hours on April 12, the stock reached an intra-day
low of $14.58 and an intra-day high of $15.09.
Currently, the stock price is within its 52-week low-high range
of $8.28 (attained on September 22, 2011) and $16.26 (achieved on
February 22, 2012). From January 30, 2012 to April 12, 2012, the
stock dropped to a low of $13.93 on January 30, 2012 and rose to a
high of $16.26 on February 22, 2012.
The economy which is still not awaken completely from the state
of hibernation, has been taking its toll on publishing companies,
and Gannett is no exception. Advertising, which remains a
significant source of revenue for the company, in turn depends upon
the global financial health.
We observe that Gannett's publishing advertising revenue fell
7.1% during the fourth quarter of 2011, following a decline of 8.5%
in the third quarter. Tough macroeconomic conditions along with
softness in advertising demand impacted the results. Advertisers
are shying away from making any upfront commitments in a cloudy
Another diversified media conglomerate,
The New York Times Company
), professed of a challenging economic environment, which we
believe will continue to dampen advertising revenue.
However, the companies are contemplating on finding new revenue
Gannett is taking initiatives to diversify its business model by
adding new revenue streams in an effort to make it less susceptible
to economic conditions. The company is also adapting to the
changing face of the multiplatform media universe, which currently
includes Internet, mobile, tablet, social media networks and
outdoor video advertising.
In an effort to offset the declining revenue and shrinking
market share, publishers are scrambling to slash costs. Gannett has
been realigning its cost structure and streamlining its operations
to increase efficiencies, and in turn the operating
To curb shrinking advertising revenue and seek new revenue
avenues, the publishing companies contemplated on charging readers
for online content. Despite hiccups in the economy, it still
promises revenue generation.
Gannett is repositioning itself for improvement in print and
digital media through a new subscription based model, whereby
subscribers will be able to access the paid content through
websites, mobile and tablet, and will have the preference of
choosing the frequency of home delivery of print editions. On the
other hand, the company will limit the number of free articles that
a non-subscriber can access.
Gannett hinted that Internet users will be allowed to access 5
to 15 articles per month without shelling out a penny. The company
said that once implemented the model will fetch $100 million.
Currently, we maintain our long-term Neutral recommendation on
the stock. Moreover, Gannett holds Zacks #3 Rank that translates
into short-term Hold rating.
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