NY Times’ Stock To Likely Trade Lower Post Q4

NYT: New York Times logo
New York Times

New York Times’ stock (NYSE: NYT), a diversified media company that includes newspapers, internet businesses, television, and radio stations, is scheduled to report its Q4 2022 results on Wednesday, February 8. We expect NYT stock to trade lower with revenues and earnings missing consensus expectations marginally for its fourth-quarter results. The media company continues to grow its subscriber base of digital-only subscribers, but this growth is largely a result of discounted offers. Its digital subscription average revenue per user (ARPU) in Q3 2022 was $8.87, flat to Q2 but declined 8% year-over-year (y-o-y) – reflective of the company’s aggressive discounting strategy. In addition, the company’s operating margins are also falling, driven by rising newsroom costs – pushing operating margins to 12.6% (down 110 basis points sequentially and 20 bps y-o-y). In response to escalating costs and a fear of losing subscribers, the company has also not been able to raise its subscription prices. It is for these reasons NYT acquired the sports news website The Athletic – its largest acquisition to date of $550 million in Q1 2022. The Times also bought the popular word game Wordle, which was a much smaller deal, yet more evidence that the company is seeking out external growth sources.

For Q4, excluding The Athletic, NYT sees digital-only subscription revenue rising to about 20% y-o-y, and total subscription revenue up 10% to 13%. The digital ad revenues and the larger total ad revenues are expected to decline by about 10%. The company is changing its fiscal year to line up with the calendar year, fixing what was set to be a six-day offset. With the 2022 fiscal year now ending on Dec. 31, 2022, the company’s fourth quarter will contain an extra six days compared with the fourth quarter of 2021.

Our forecast indicates that NY Times’ valuation is $34 per share, which is 7% lower than the current market price. Look at our interactive dashboard analysis on New York Times Earnings Preview: What To Expect in Fiscal Q4? for more details.

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(1) Revenues expected to be slightly below the consensus estimates

Trefis estimates NY Times’ Q4 2022 revenues to be around $643 Mil, slightly below the consensus estimate. In Q3, NYT’s revenue grew 8% y-o-y, mostly in line with expectations, to $547.7 million as the company wrestled with the industry-wide slowdown in digital advertising. Overall revenue growth is stagnating in the single digits, driven by declines in print and advertising. Digital revenue growth is currently only held up by the acquisition of the Athletic, and the pace of subscriber additions is weak in comparison to 2020, which consumed a lot of news (pandemic and a presidential election). To boost its growth, the Times has turned to acquire several different companies. Total subscriptions came in at 10.75 million and digital-only subs were 10.02 million. The company has now set a new target of at least 15 million total subscribers by the end of 2027.

2) EPS to likely miss consensus estimates marginally

NYT’s Q4 2022 earnings per share (EPS) is expected to come in at 41 cents per Trefis analysis, missing the consensus estimate marginally. NYT earned 22 cents a share, down 33% y-o-y, excluding one-time items, in Q3. Higher costs due to its M&A strategy led to its EPS decline.

(3) Stock price estimate lower than the current market price

Going by our NYT’s Valuation, with an EPS estimate of around $1.05 and a P/E multiple of 32.6x in fiscal 2022, this translates into a price of almost $34, which is nearly 7% lower than the current market price.

It is helpful to see how its peers stack up. NYT Peers shows how NYT’s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Feb 2023
MTD [1]
YTD [1]
Total [2]
 NYT Return 4% 12% 173%
 S&P 500 Return 1% 7% 84%
 Trefis Multi-Strategy Portfolio 1% 13% 256%

[1] Month-to-date and year-to-date as of 2/7/2023
[2] Cumulative total returns since the end of 2016

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