NEW YORK (TheStreet) -- Shares of Gannett Co. (GCI) are up 6.35% to $36.50 in pre-market trade after the media and marketing company agreed to buy out the other companies that own Cars.com, and will split it into two publicly traded companies, one focused on broadcasting and digital businesses and the other on publishing, Bloomberg reports.
Gannett said it will buy the 73% interest it doesn't already own in Classified Ventures LLC, which owns Cars.com, for $1.8 billion in cash.
Cars.com lets users check prices, compare models and read reviews of auto dealers. The publishing business will be split through a tax-free distribution of assets to shareholders.
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 increase in net income, revenue growth, expanding profit margins, solid stock price performance and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
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 83.5% when compared to the same quarter one year prior, rising from $113.62 million to $208.47 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 12.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- 48.32% is the gross profit margin for GANNETT CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.27% is above that of the industry average.
- Powered by its strong earnings growth of 87.50% and other important driving factors, this stock has surged by 27.01% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GCI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- GANNETT CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GANNETT CO reported lower earnings of $1.65 versus $1.79 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $1.65).
- You can view the full analysis from the report here: GCI Ratings Report