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New York Times (NYT) Up 9.7% Since Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for New York Times CompanyNYT . Shares have added about 9.7% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is NYT 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 Tops on Q4 Earnings, Digital Subscribers Rise

The New York Times Company posted sixth straight quarter of positive earnings surprise, when it reported fourth-quarter 2017 results. The company delivered adjusted earnings from continuing operations of 39 cents a share that came ahead of the Zacks Consensus Estimate of 30 cents and jumped 30% from the year-ago quarter. The newspaper publisher's total revenue of $484.1 million rose 10.1% year over year, and came ahead of the Zacks Consensus Estimate of $467.3 million.

The company's positive earnings surprise streak and increase in digital subscribers have helped propelled the stock.

The quarter witnessed an increase in digital advertising and subscription revenues but a decline in print advertising revenue.

Let's Delve Deep

Subscription revenue grew 19.2% to $269.4 million, primarily due to increase in the number of subscriptions to the digital-only products. Revenue from digital-only subscriptions products jumped 51.2% to $96.3 million. Management now projects total subscription revenue in the first quarter of 2018 to increase in the mid to high-single digits.

Total advertising revenue came in at $182.6 million in the reported quarter, down 1.3% year over year. In the preceding quarter, total advertising revenue had declined 9%. Print advertising revenue fell 8.4% to $98.4 million in the quarter under review, following a decline of 20.1% in the preceding quarter. Total advertising revenue in the first quarter is projected to decline in the mid to high-single digits.

Digital advertising revenue increased 8.5% to $84.2 million, after witnessing an increase of 11% in the preceding quarter. Higher digital advertising revenue came on the back of rise in revenues from mobile platform, programmatic buying channels and branded content, partly offset by a fall in traditional website display advertising.

Adjusted operating costs came in at $375.8 million during the quarter, up 9.3% year over year. Management now anticipates adjusted operating costs to increase in the low-single digits in the first quarter. Total adjusted operating profit grew 13.2% to $108.3 million.

Other Financial Aspects

The New York Times Company ended the quarter with cash and marketable securities of about $732.9 million, and total debt and capital lease obligations of approximately $250.2 million. The company incurred capital expenditures of about $37 million during the quarter. Management envisions capital expenditures in the band of $60-$70 million for 2018.

Wrapping Up

Advertising, which remains a significant source of revenue, is largely dependent on the global financial health. Softness in advertising demand has been weighing on The New York Times Company's performance. Consequently, the company is trying in every way to shield itself from the impact of an unstable market and contemplating on new avenues of revenue generation. The company had offloaded assets that bear no direct relation to its core operations in order to re-focus on core newspapers and pay more attention to online activities.

The New York Times Company has been adding diverse revenue streams, such as a pay-and-read model, to stay less vulnerable to economic conditions. The company is also adapting to the changing face of the multiplatform media universe, and has already included mobile and reader application products in its portfolio.

Despite hiccups in the economy, what still promises revenue generation is The New York Times Company's pricing system for NYTimes.com, which was launched on Mar 28, 2011. The company notified that the number of paid digital subscribers reached 2,644,000 at the end of the reported quarter - rising 157,000 sequentially and 41.8% year over year.

The New York Times Company remains committed to streamlining cost structure, strengthening balance sheet and rebalancing portfolio.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter In the past month.

New York Times Company (The) Price and Consensus

New York Times Company (The) Price and Consensus | New York Times Company (The) Quote

VGM Scores

At this time, NYT has a poor Growth Score of F. Its Momentum is doing a lot better with a B. The stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable soley for momentum based on our styles scores.

Outlook

Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, NYT has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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