TSC Ratings' Updates: Gannett

The company has experienced a steep decline in earnings per share in the most recent quarter in comparison with its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year.

The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared with the S&P 500 and the media industry. The net income has significantly deteriorated by 726.5% when compared with the same quarter one year ago, falling to -$2,290.76 million from $365.66 million. During the past fiscal year, Gannett reported lower earnings of $4.18 a share vs. $4.80 a share in the prior year. For the upcoming fiscal year, Wall Street is expecting earnings to fall 12.7% to $3.65 a share.

Return on equity has greatly decreased when compared with its return on equity from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared with other companies in the media industry and the overall market, the firm's return on equity significantly trails that of both the industry average and the S&P 500. Its net cash generation rate is also lower than the industry average -- net operating cash flow in its current quarter decreased to $199.69 million, or a decline of 23.92%.

Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: It has tumbled by 54.02%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 908.87% compared with the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. As a result, we feel the stock is not a good buy at current price levels. Gannett had been rated a hold since Aug. 14, 2006.