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Why Gannett (GCI) Stock Is Climbing Today

NEW YORK (TheStreet) -- Shares of Gannett Co. (GCI) are up 4.79% to $33.24 after the newspaper and broadcast company beat analyst expectations for the second quarter, reporting earnings per share of 67 cents, up 15.5% from 58 cents from the same quarter last year, and beating the consensus estimate of 64 cents.

Revenue was up 12.1% year-over-year to $1.46 billion for the quarter, below the consensus estimate of $1.48 billion. 

Broadcasting revenue, which accounts for more than a quarter of Gannett's total, rose 13.4% to $398.3 million which benefited from the acquisition of Belo's TV stations.

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Publishing revenue fell 4.1% to $867.4 million, on a 5.7% decline in advertising revenue and 0.6% slip in circulation revenue to $530.2 million and $277.9 million, respectively.

Separately, TheStreet Ratings team rates GANNETT CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate GANNETT CO (GCI) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.7%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has significantly increased by 357.52% to $166.00 million when compared to the same quarter last year. In addition, GANNETT CO has also vastly surpassed the industry average cash flow growth rate of 6.62%.
  • 45.53% is the gross profit margin for GANNETT CO which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 4.21% trails the industry average.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • You can view the full analysis from the report here: GCI Ratings Report
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