NYT

NY Times (NYT) Up 5.4% Since Earnings Report: Can It Continue?

A month has gone by since the last earnings report for N ew York Times CompanyNYT . Shares have added about 5.4% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

NY Times Q1 Earnings Beat, Digital Subscribers Rise

The New York Times Company posted third straight quarter of positive earnings surprise, when it reported first-quarter 2017 results. The company delivered adjusted earnings from continuing operations of $0.11 per share that came ahead of the Zacks Consensus Estimate of $0.06 and increased 10% from the year-ago quarter. The newspaper publisher's total revenue of $398.8 million outpaced the Zacks Consensus Estimate of $385 million and rose 5.1% year over year.

The quarter witnessed a spectacular increase in digital subscribers, rise in digital advertising and circulation revenues but a decline in print advertising revenue. Management also hinted that growth in the number of paid digital-only subscriptions to news products in the second quarter is likely to be soft compared with the preceding two quarters.

Let's Delve Deep

Circulation revenue grew 11.2% to $242.4 million, primarily backed by the company's digital subscription initiatives and a rise in the home delivery price of The New York Times. Circulation revenue from digital-only subscriptions jumped 40% to $75.8 million. Circulation revenue from digital-only subscriptions to news products rose 39.9% to $72.9 million. Management now projects total circulation revenue in the second quarter to increase at a rate equivalent to that registered in the first quarter.

Total advertising revenue came in at $130 million in the reported quarter, down 6.9% year over year. We observe that the rate of decline decelerated from 9.7% witnessed in the preceding quarter. Print advertising revenue fell 17.9% in the second quarter, following a fall of 20.4% in the previous quarter.

Digital advertising revenue surged 18.9% to $49.7 million, after witnessing an increase of 10.9% 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.

The company on one hand saw a 9.1% drop in the display advertising category, while on the other hand it witnessed a 12.9% jump in the classified and other advertising category. The diversified media conglomerate hinted that total advertising revenue in the second quarter is likely to decline in the low- to mid-single digits.

Adjusted operating costs came in at $346.1 million during the quarter, up 5.5% year over year. Management now anticipates adjusted operating costs to increase in the mid-single digits in the second quarter. Total adjusted operating profit grew 2.2% to $52.7 million.

Other Financial Aspects

The New York Times Company ended the quarter with cash and marketable securities of about $752.5 million, and total debt and capital lease obligations of approximately $247.8 million. The company incurred capital expenditures of about $6 million during the quarter. Management envisions capital expenditures in the band of $85- $90 million for 2017.

Conclusion

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 2,201,000 at the end of the reported quarter - rising 348,000 sequentially (308,000 came from the digital news products and 40,000 from the Crossword product) and 62.2% 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?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

New York Times Company Price and Consensus

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

VGM Scores

At this time, the stock has a poor Growth Score of 'F', however its momentum is doing a bit better with a 'D'. However, the stock was allocated a grade of 'F' on the value side, putting it in the fifth quintile 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.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The stock has a Zacks Rank #2 (Buy). We are expecting an above average 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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