Gannett Co., Inc. (NYSE:GCI) has a Better Operating Performance
In 2012, The New York Times reported $133 million in profits, or $0.87 per share. At the current trading price of $9.20 per share, The New York Times is valued at around 5.64x EV/EBITDA. Compared to its peers Gannett Co., Inc. (NYSE:GCI) and The Washington Post Company (NYSE:WPO), it seems to have a quite reasonable valuation. Gannett, with a current price of $19.85 per share, is worth $4.56 billion on the market. The market is valuing Gannett at around 5.23x EV/EBITDA. The Washington Post Company (NYSE:WPO)’s share price is currently $407 per share, with a total market cap of $3 billion. It is valued similarly, at about 5.2x EV. Among the three, Gannett is the most profitable business with the highest operating margin. While the operating margins of The New York Times and The Washington Post were only 8% and 6%, respectively, Gannett has an 18% operating margin. The high operating margin was due to extremely low operating costs. Over the past 12 months, Gannett’s Sales, General and Administrative costs (SG&A) accounted for only 24.4% of the total sales, while the SG&A of The Washington Post was much higher at nearly 39.5%. The New York Times had the highest SG&A among the three at 43.8%.
Foolish Bottom Line
The sale of the Boston Globe would definitely make The New York Times more profitable and drive up its share price in the near term. However, among the three newspaper companies, I am more impressed in Gannett due to its lowest operating cost. As those three companies have similar valuations, Gannett is a better pick than the other two.
The article What News Company is a Good Pick Now? originally appeared on Fool.com and is written by Anh HOANG.
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