Gannett Co., Inc
) 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
The New York Times Company
), 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
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
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
) and News Corporation, which hold a Zacks Rank #1 (Strong Buy)
and a Zacks Rank #2 (Buy), respectively.
GANNETT INC (GCI): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis
NY TIMES A (NYT): Free Stock Analysis Report
EW SCRIPPS CO (SSP): Free Stock Analysis
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