Based on its current market price and future growth prospects, New York Times (NYSE: NYT) looks fairly valued. Trefis has a price estimate of $32 per share for New York Times’ stock, which is in line with its current stock price (as of November 27, 2019).
To understand the major factors that are driving our stock price estimate for NYT’s stock, you can refer to the Trefis interactive dashboard – New York Times Valuation: Expensive of Cheap? – and alter the key assumptions to arrive at your own estimate for the company’s stock price.
About The Company
NYT is a large media company operating under 3 primary segments-
- Subscription: Consist of revenues from subscriptions to the print and digital products (which include news products, as well as Crossword and Cooking products) and single-copy sales of the print newspaper.
- Advertising: Includes sale of advertising products and services on print and digital platform.
- Others: Includes revenues from licensing, affiliate referrals, building rental revenue, commercial printing, NYT Live (live events business), and retail commerce.
Estimating Total Revenues
- New York Times total revenues have increased from $1.6 billion in 2016 to $1.7 billion in 2018, adding about $100 million in revenues over the last two years.
- However, over the next two years, the company is expected to add about $200 million to its revenue base, with total revenues projected to increase to $1.9 billion by 2020.
- Higher revenue is expected to be driven by higher subscription for the company’s digital products, increased commercial printing and rental revenue, partially offset by lower print advertising revenues.
For detailed analysis on how each revenue segment of New York Times has performed and how NYT’s revenue growth compares with its competitors, please refer to our interactive dashboard.
Estimating Net Income
- After decreasing in the initial years, net income margin increased sharply from 0.3% in 2017 to 7.2% in 2018, led by lower depreciation expense, interest cost, tax expense, and gains from joint ventures.
- Margins are expected to remain elevated in 2019 (7.3%) and 2020 (7.4%), driven by higher revenues, reduction in production and SG&A cost as a % of revenue, lower depreciation expense, and increasing share of high-margin digital business.
Estimating Earnings Per Share
- EPS increased significantly from $0.03/share in 2017 to $0.75/share in 2018, on the back of higher margins, driven by sharp drop in tax expenses following the implementation of TCJ Act, and lower pension costs.
- EPS is expected to remain elevated and rise slightly to $0.79/share and $0.81/share in 2019 and 2020, respectively.
Share Price Estimation
As per New York Times’ Valuation by Trefis, we have a price estimate of $32 per share for NYT’s stock. The stock price estimate is arrived using the discounted cash flow valuation technique, which you can find in New York Times’ detailed financial model here. Based on a projected EPS of $0.81/share and stock price estimate of $32/share, New York Times’ forward price-to-earnings (P/E) multiple stands at 40x.
To understand how NYT’s P/E multiple compares with its peers, view our interactive dashboard.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.