This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Gannett Deserves a Second Read

NEW YORK (TheStreet) -- Gannett (GCI) did something yesterday that it has been unable to do for more than four-and-a-half years; the stock closed above $20 for the first time since June of 2008. There were no trumpets, no alarm bells, and no fireworks as a result of this feat, but it does appear that investors are once again starting to take notice.

Best known for its newspaper business, and in particular for being the parent of USA Today, it's been a somewhat long road to recovery for Gannett. The company was all but given up for dead in early 2009, as the stock slid below $2. The dividend was slashed 90% from 40 cents to 4 cents, and a level of debt that previously was not much of an issue became problematic as advertising sales went into one of the deepest slumps ever experienced. Trading at $2, the company's market cap was just over $450 million, turning a former large cap arguably of "for widows and orphans" quality into a small-cap name with lots of debt and no prospects in a dying industry.

At least, that's what the market saw. But those who took a look under the hood would have seen a company that was still generating gobs of free-cash flow and attempting to get its financial house in order by selling off some assets, paying down debt, and extending debt maturities. As off the latest quarter end, Gannett had $1.4 billion in net debt, down from $3.7 billion at year-end 2008.

The company has also been resurrecting the dividend, which now stands at 20 cents per quarter. That's half of the pre-crisis dividend, but a long way back from 4 cents. Despite Gannett's run-up above $20, the stock still yields 4%, and there may be sufficient cash flow to further raise the dividend.

Even with the stock's 60% run since last June, shares still trade at just 11 times trailing earnings, and just under 9 times 2013 consensus estimates. Incidentally, the consensus has been pretty conservative with the estimates and Gannett seems to routinely beat the consensus, including 6+% upside surprises in the past two quarters. We'll see if Gannett can surprise again when the company reports fourth quarter results on Feb. 4, but I suspect that the Street is staring to become a bit less skeptical.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,042.65 +98.84 0.58%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs