Although the level of debt was of great concern, the company began to pay it down. By year-end 2010, debt was reduced to $2.5 billion, and the company was highly profitable and putting up better-than-expected numbers.
In September 2011, the company doubled its quarterly dividend from 4 cents a share to 8 cents. Just two quarters later, Gannett increased the dividend by 250%, to 20 cents. By then, debt was down to $1.4 billion, and the company was also buying back stock.
GCI Long Term Debt data by YCharts
The stock is now up 13 times the low point it hit back in 2009. Along the way, skepticism has remained in the markets and among analysts, and the company has traded at very low multiples at times. Perhaps newspaper companies deserve low multiples. But the announcement of yesterday's deal might finally deal with the perception of what Gannett really is.
Even with yesterday's blistering performance, the stock yields 3%, and trades at about 11 times the 2014 consensus estimate, which does not yet include the potentially accretive nature of the acquisition. I believe that there also may be room for further dividend increases, but time will tell.At the time of publication the author held no positions in any of the stocks mentioned. Follow @JonMHellerCFA This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- 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 + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV