An Overview Of New York Times’ 2017 So Far

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The New York Times Company (NYSE:NYT) has had a relatively solid 2017 so far, as its earning per share came in ahead of market expectations in all three quarters. The company’s stock is now trading almost 20% higher than its price at the beginning of the year. Below we discuss the key factors driving the company this year so far.

Our $16 price estimate for New York Times’ stock is slightly below the current market price.

Digital Driving Growth

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In the first nine months of fiscal 2017, NYT reported unprecedented growth in digital subscriptions, which helped the company stabilize its subscription revenues. During this period, the company’s total subscription revenues increased 13% year-over-year (y-o-y), with digital-only subscription revenue growing strongly at 44% y-o-y to $244 million. This surge in NYT’s subscriptions is largely attributable to the political climate, as the company has been witnessing significant growth in its readership since the U.S. Presidential election. In addition, the increase in home delivery revenues so far, which primarily resulted from a price increase in early 2017, led to an increase in print subscription revenues. However, the newspaper witnessed a reduction in the number of print copies sold in this period. In terms of paid subscriptions, the company now has around 3.5 million total subscriptions (print and digital).

NYT’s advertising revenue declined 5% y-o-y this year so far, primarily due to continued headwinds in print advertising (-16%), partially offset by a strong 18% growth in digital advertising. The lower print advertising revenue was mainly due to declines in display advertising (-17%), primarily in the luxury, real estate, technology and telecommunications and travel categories, while the increase in the company’s digital advertising was driven by gains in smartphone branded content, marketing services and programmatic. Overall, NYT’s total revenues grew 7% y-o-y to $1.2 billion, driven by very strong digital revenues.

On the expense side, the company’s operating costs increased 4% so far, due to higher marketing costs, increased compensation costs and costs from acquired companies, partially offset by lower print production and distribution costs. NYT’s adjusted operating profit increased a robust 95% to $90 million in the same period, driven by the growth in digital and print subscription revenues. The company also posted adjusted earnings of 42 cents, up 56% y-o-y compared to the same period last year.

Future Outlook

Going forward, we expect continued year-over-year growth in Q4 2017, but at a slower rate than in the prior three quarters, followed by strong growth thereafter. However, if the company is able to maintain a growth rate of around 20% there could be an upside of nearly 10% to our price estimate.

In Q4 2017, NYT expects its total subscription revenues to grow around 10% y-o-y. In addition, it expects the digital subscription revenue to grow at a solid 40% y-o-y. However, the company also expects its overall advertising revenue to decline in low double-digits, with digital advertising flat or decreasing slightly.

Have more questions? Please refer to our complete analysis for New York Times 

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