The New York Times Company NYT is scheduled to release first-quarter 2015 results on Apr 30. The big question facing investors is whether this newspaper publishing company will be able to continue its positive earnings surprise streak in the quarter to be reported. Here’s a discussion on the determinants of Q1 results:
Earnings Surprise History
The New York Times Company’s past performance reveals that it has outperformed the Zacks Consensus Estimate in the trailing four quarters by an average of 118.9%. In the third and final quarters of 2014, the company registered positive earnings surprises of 400% and 13%, respectively, and analysts believe that the momentum building around the stock is guiding towards another impressive performance.
Consensus Estimate Positively Skewed
Following a better-than-expected fourth quarter of 2014, the Zacks Consensus Estimate showed an uptrend, climbing 8.3% and 2% respectively to 52 cents a share for both 2015 and 2016 over the past 90 days. The Zacks Consensus Estimate for the first quarter of 2015 also surged 33.3% to 8 cents over the same time frame, thus keeping alive investors’ confidence in an earnings beat. Over the past 30 days too, the Zacks Consensus Estimate for the first quarter and 2015 has shown a positive movement, rising 14.3% and 4%, respectively.
Growth Score Confirms Upside Potential
The attractiveness of The New York Times Company as an investment option is also confirmed by its Growth Style Score of ‘B.’ The Growth Style Score combine conventional growth metrics with a thorough analysis of the company’s income statement, balance sheet and statements of cash flows to evaluate its financial health and the sustainability of its growth trajectory. Back-tested results show that stocks with a Growth Style Score of A or B, when combined with a Zacks Rank # 1 or 2, offer the best upside potential.
Zacks Model Speaks of Likely Earnings Beat
Our proven model shows that The New York Times Company is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. The Most Accurate estimate stands at 9 cents and the Zacks Consensus Estimate is pegged at 8 cents. So the ensuing +12.50% ESP and the company’s Zacks Rank #3 (Hold) make us reasonably confident of a positive earnings beat.
A Look at Fundamentals
The New York Times Company is trying every means to shield itself from the impact of an unstable market and contemplating on new revenue generating avenues. The company has also been offloading assets that bear no direct relation to its core operations in order to re-focus on its core newspapers and pay more attention to its online activities.
The company has been adding diverse revenue streams, such as a pay-and-read model, to make it 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.
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