If you’re considering an investment in The New York Times, then you might also be considering an investment in Gannett Co., Inc. (NYSE:GCI). Gannett is a larger company, with a market cap of $5.76 billion, versus $1.78 billion for The New York Times.
Gannett Co., Inc. (NYSE:GCI) is best known for its USA Today brand, and to a smaller extent, Clipper magazine. Overall, it has 82 publications with affiliated online sites. Furthermore, it has outperformed The New York Times over the past three years, with stock appreciation of 131%, versus 58% at The Times. And Gannett Co., Inc. (NYSE:GCI) is trading at just 8 times earnings, versus 31 times earnings for The New York Times. As if those aren’t enough selling points for Gannett Co., Inc. (NYSE:GCI), it currently yields 3.20%. These key metrics, as well as brand diversification, are likely to make Gannett Co., Inc. (NYSE:GCI) a better investment going forward. That said, neither are resilient to broader market corrections, and therefore they should both be looked at with curbed enthusiasm.
News Corporation is also bigger than The New York Times, sporting a market cap of approximately $9 billion. However, while The New York Times has a positive net margin (percentage of revenue turned into profit) of 10.22%, and an ROE (percentage of investor dollars turned into dollars) of 23.23%, News Corp has a negative net margin of (6.71%) and a negative ROE of (2.63%). The stock is also trading at lofty 32 times earnings.
Some investors refer to News Corp as “The Bad News Corp,” with “The Good News Corp” being 21st Century Fox. But that’s a story for another time. News Corp owns many popular brands, including The Wall Street Journal and New York Post. What might make News Corp a better long-term investment than The New York Times is its tremendous cash position (for its industry) of $1.54 billion, with no long-term debt. Therefore, News Corp doesn’t have to rely on organic growth; it has the capability to acquire smaller companies in order to grow.
The New York Times Company (NYSE:NYT) is a tremendously valuable brand name. Therefore, it will likely never fail. However, it’s facing difficult times ahead. With advertisers remaining cautious, and the company seeing ad revenue declines in every area, this doesn’t look to be the ideal entry point for a long-term investment.
The article This Publishing Company is Falling Victim to a Vicious Cycle originally appeared on Fool.com and is written by Dan Moskowitz.
Dan Moskowitz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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