Following a spate of mostly positive earnings from newspaper publishers, one Wall Street analyst is saying that Gannett (GCI), which publishes USA Today and other papers, is a good value investment.
Zacks Investment Research yesterday issued a “strong buy” rating on shares of Gannett, saying that the stock is cheap relative to the company’s expected profits, and “Gannett is running a much more efficient business,” having reduced its debt and beaten Wall Street expectations multiple times in a row.
The upgrade is the latest in a series of encouraging developments in the wood-pulp business. Last week, J.P. Morgan issued rosy predictions for the newspaper industry, saying that moderating revenue declines would bolster companies’ first-quarter results. Several weeks ago, a Barron’s article that said shares of The Washington Post Co. could nearly double helped fuel a rally in the sector.
Newspapers for the most part have lived up to that rosy outlook. Last Friday, Gannett announced that its first-quarter profit had more than doubled year over year despite continuing revenue declines. Fellow newspaper companies Lee Enterprises and Journal Communications likewise posted strong results. Media General posted a loss stemming from interest and tax payments, but results from operations were more encouraging.