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NY Times (NYT) to Post Q4 Earnings: Soft Ad Revenues a Woe

Zacks Equity Research

The New York Times Company NYT is scheduled to report fourth-quarter 2019 financial numbers on Feb 6, before the opening bell. In the last reported quarter, the company recorded positive earnings surprise of 9.1%. This diversified media conglomerate has a trailing four-quarter positive earnings surprise of 19.9%, on average.

The Zacks Consensus Estimate for fourth-quarter earnings is currently pegged at 35 cents, which indicates an increase of 9.4% from the year-ago reported figure. We note that the Zacks Consensus Estimate has risen by a couple of cents in the past 30 days. The Zacks Consensus Estimate for revenues is pegged at $508.7 million, suggesting growth of about 1.2% from the prior-year period.

Factors Holding Key

The New York Times Company has been grappling with declining print readership and soft advertising revenues for quite some time now. Readers’ preference for accessing news online, mostly free, has made the print-advertising model increasingly redundant. To mitigate the impact of same, the company has been making concerted efforts to lower dependency on traditional advertising and focus on digitization.

However, management at its last earnings call hinted that it has been facing a “fairly challenging” environment in the digital advertising space, which is likely to have continued in the fourth quarter because of prior-year period’s sturdy performance. Further, management had projected mid-teens decline in both digital and total advertising revenues for the to-be-reported quarter.

Nonetheless, the company has been diversifying business, adding new revenue streams and streamlining operations to increase efficiencies. The company has been gearing up to become not only an optimum destination for news and information but is also focusing on service journalism, with verticals like Cooking, Watching and Well. It has been also resorting to data analytics and modeling to not only engage the audience but also provide targeted marketing services on behalf of local businesses.

Moreover, with readers’ increasing preference for accessing news online, the company has been concentrating on online activities, as evident from its pay-and-read model. In 2019, the company added more than 1 million net digital subscriptions, the highest annual run-rate since the launch of the digital model. Also, the company passed its goal of $800 million of annual digital revenues in 2019.

We note that management had earlier guided low to mid-single digit increase in total subscription revenues and mid-teens growth in digital-only subscription revenues for the fourth quarter.

The New York Times Company Price, Consensus and EPS Surprise

 

The New York Times Company Price, Consensus and EPS Surprise

The New York Times Company price-consensus-eps-surprise-chart | The New York Times Company Quote

What the Zacks Model Unveils?

Our proven model doesn’t conclusively predict an earnings beat for The New York Times Company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Although The New York Times Company carries a Zacks Rank #2, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combination

Here are companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Cable One CABO has an Earnings ESP of +3.89% and a Zacks Rank of #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DISH Network DISH has an Earnings ESP of +1.94% and a Zacks Rank of #2.

Discovery DISCA has an Earnings ESP of +0.21% and a Zacks Rank of #3.

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