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Things You Need to Know Before NY Times' (NYT) Q2 Earnings

The New York Times Company NYT, a diversified media conglomerate, is slated to report second-quarter 2017 results on Jul 27. In the trailing four quarters, it has outperformed the Zacks Consensus Estimate by an average of 31.4%. In the preceding quarter, the company witnessed a positive earnings surprise of 83.3%. Let’s see how things are shaping up for this announcement.

Let’s take a closer look as to how The New York Times Company, which forms part of the Consumer Staples sector, is expected to contribute this earnings season. As per the latest Earnings Preview report, total earnings and revenues for the sector are anticipated to increase by 3.1% and 1.2%, respectively. We noted that the Consumer Staples sector has underperformed the broader market in the past three months. In the said time frame, this Zacks categorized sector has gained 1.5%, while S&P 500 Index has advanced 4%.

What to Expect?

The question lingering in investors’ minds now is whether the company will be able to continue with its positive earnings surprise streak in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is 13 cents compared with 11 cents reported in the year-ago period. We note that the Zacks Consensus Estimate has been stable lately. Analysts polled by Zacks expect revenues of $394.4 million, up about 6% from the year-ago quarter.

New York Times Company (The) Price, Consensus and EPS Surprise

 

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

Factors at Play

The New York Times Company is diversifying business, adding new revenue streams, strengthening balance sheet along with restructuring portfolio. It has offloaded assets in order to re-focus on core newspapers and pay more attention to its online activities. We believe these moves will have a favorable impact on the quarter to be reported. The company is not only gearing up to become an optimum destination for news and information but is also now focusing on service journalism, with verticals like Cooking, Watching and Well. The company has launched digital subscriptions for NYT Cooking, its popular recipe site and app.

However, advertising revenue remains an area of concern for the company. We observed that the company has been struggling with dwindling advertising revenue for quite some time now. Total advertising revenue dropped 6.9% during the first quarter of 2017, following declines of 9.7%, 7.7%, 11.7% and 6.8% witnessed in the fourth, third, second and first quarters of 2016, respectively. Maintaining the same chronological order print advertising revenue fell 17.9%, 20.4%, 18.5%, 14.1% and 9%, respectively. Management expects total advertising revenue to decline in the low- to mid-single digits during the second quarter.

Nevertheless, we noted that The New York Times Company has outperformed the respective industry in the past three months. The stock has surged 22.3%, while the industry gained 5.2%.

What Does the Zacks Model Say?

Our proven model does not conclusively show that The New York Times Company is likely to beat earnings estimates this quarter. This is because a stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

The New York Times Company has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 13 cents. The company’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

Stocks with Favorable Combination

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

Time Warner Inc. TWX has an Earnings ESP of +3.39% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Scripps Networks Interactive, Inc. SNI has an Earnings ESP of +0.66% and a Zacks Rank #3.

Discovery Communications, Inc. DISCA has an Earnings ESP of + 1.41% and a Zacks Rank #3.

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New York Times Company (The) (NYT): Free Stock Analysis Report
 
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