These three companies will be reviewed for their revenue growth, profit margins, ROE, and free cash flows.
Compared to New York Times, the revenue growth rate for Gannett and Washington Post had been relatively stable throughout mid-2010 to early 2013. Currently, Gannett has the highest revenue growth rate in Q1 2013 as compared to the other two.
Although Gannett has the lowest profit margin among the three, it has a relatively consistent profit margin since 2010. On the other hand, New York Times and Washington Post’s profit margins have been declining gradually since early 2010.
By taking out the wide swing in 2009, Gannett had the highest ROE among the three companies since early 2010 to late 2012. However, New York Times’ ROE has been increasing since mid-2011 and surpassed Gannett’s in late 2012.
Gannett continues to have the most solid free cash flow as compared to the other two companies. At the end of 2012, Gannett’s free cash flow was almost twice of Washington Post’s while Times had a negative cash flow.
While the media business continues to be dragged by secular decline of the newspaper printing business, Gannett’s overall revenue was helped by the improving digital segment and continuous cost reduction, as well as the new paywall model. However, investors should not expect much revenue growth for 2013 due to the absence of Olympics and reduced political spending after the 2012 election. Overall, Gannett remains a strong pick in the newspaper printing/media business with its stabilized revenue, consistent ROE, and solid free cash flow.
The article This Newspaper Company Is Still Solid originally appeared on Fool.com and is written by Nick Chiu.
Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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