NEW YORK (TheStreet) -- Journal Communications (JRN) shares are climbing in early market trading on Thursday, up 19% to $10.42, after the company announced that it had reached an agreement with E.W. Scripps (SSP - Get Report) to merge broadcast operations.
The two companies will spin off their newspaper holdings into a separate company as part of the deal.
The Journal Media Group will consist of the the Journal Sentinal and the Scripps newspapers and will be headquartered in Milwaukee, WI.
The Journal Communications arm will be merged with Scripps and headquartered in Cincinnati, OH.
The new broadcast company bearing Scripps name is expected to generate $800 million in annual revenue.
Scripps shares are up 9.55% to $21.88 today.
TheStreet Ratings team rates JOURNAL COMMUNICATIONS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
Must Read: Warren Buffett's 25 Favorite Stocks
"We rate JOURNAL COMMUNICATIONS INC (JRN) a BUY. This is driven by several positive factors, 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 increase in net income, revenue growth, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 221.3% when compared to the same quarter one year prior, rising from $3.79 million to $12.19 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 12.5%. Since the same quarter one year prior, revenues slightly increased by 3.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- Net operating cash flow has significantly increased by 148.02% to $21.68 million when compared to the same quarter last year. In addition, JOURNAL COMMUNICATIONS INC has also vastly surpassed the industry average cash flow growth rate of 2.76%.
- The gross profit margin for JOURNAL COMMUNICATIONS INC is rather high; currently it is at 50.00%. 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 12.61% trails the industry average.
- You can view the full analysis from the report here: JRN Ratings Report