New York Times (NYSE: NYT) is scheduled to report its fiscal first-quarter results on Wednesday, May 5. We expect NYT to likely beat the revenue and earnings expectations, driven by the positive momentum of digital subscriptions in Q1. The company expects subscription revenues to increase approximately 15% compared with the first quarter of 2020 with digital-only subscription revenue expected to increase approximately 35% to 40%. Overall advertising revenues are expected to decrease in the high teens year-over-year (y-o-y) while digital advertising revenues are expected to increase in the low-to-mid single-digits.
Our forecast indicates that NYT’s valuation is $50 a share, which is 10% higher than the current market price of $46. Look at our interactive dashboard analysis on NYT’s pre-earnings: What To Expect in Q1? for more details.
(1) Revenues to be slightly ahead of consensus estimates
Trefis estimates NYT’s Q1 2021 revenues to be around $470 Mil, slightly ahead of the consensus estimate of $463 Mil. In fiscal 2020, NYT’s total revenue declined 2% y-o-y. The pandemic cut deeper into ad sales, which were already falling as fewer people read the paper in print form, and many companies cut their marketing budgets. NYT’s online advertising revenues also fell due to a falloff in the company’s native content business, in which it creates paid articles for sponsors. However, the paper’s bet on digital readers continued to pay off in 2020, bringing the total of paid online readers to more than 6.6 million. At present, the company has 7.5 million total print and digital subscribers and is well ahead of its goal to achieve 10 million subscribers by 2025.
The growing user base, coupled with investments in other fields such as audio storytelling, could boost the company’s overall revenues going forward. The company has big ambition in audio journalism particularly with The Daily (NYT’s news podcast with around 3.5 million listeners each day), Serial Productions (NYT’s acquired this company that produces the Serial Podcast), and a new partnership with This American Life (a radio program). Also, the Times has begun to reach new audiences through TV and films with its documentaries on Netflix and Hulu.
2) EPS expected to be ahead of consensus estimates
NYT’s Q1 2021 earnings per share (EPS) is expected to be $0.16 per Trefis analysis, 14% ahead of the consensus estimate of $0.14. Operating costs are expected to be in the mid-single digits compared with the first quarter of 2020 as the company continues to invest in the drivers of digital subscription growth. We expect the company’s falling ad business to negatively impact profitability.
For the full year, we expect NYT’s adjusted net margin to decline 90 basis points y-o-y to 8.2% in fiscal 2021. This coupled with a 9% y-o-y rise in New York Times’ Revenue, could lead to a drop of $4 million y-o-y in adjusted net income to $163 million in 2021. All this, resulting in a possible adjusted EPS decline from $0.97 in 2020 to around $0.95 in 2021.
(3) Stock price estimate higher than the current market price
Going by our New York Times Valuation, with an adjusted EPS estimate of around 95 cents and P/E multiple of around 53x in fiscal 2021, this translates into a price of $50, which is 10% higher than the current market price of $46.
While NYT may look slightly undervalued, it is helpful to see how its peers stack up. Check out NYT Stock Comparison With Peers to see how NYT compares against peers on metrics that matter.