Soft Circulation Revenues To Hurt Gannett (GCI) Q4 Earnings

Gannett Co., Inc. (NYSE:GCI) is slated to report fourth-quarter 2017 results on Feb 20. In the preceding quarter, the company delivered a positive earnings surprise of 100%. Also, its earnings surpassed the Zacks Consensus Estimate by 36.6% in the trailing four quarters.

We note that few companies from the Publishing-Newspaper industry, which occupies the bottom 30% (186 out of 256) position, have reported their quarterly numbers so far. Among these publishing stocks, The New York Times Company (NYSE:NYT) surpassed both top and bottom lines while The McClatchy Company’s (NYSE:MNI) earnings missed the consensus mark but revenues outpaced the same.

Further, steadily declining advertising revenues and print readership have emerged as enduring features of the U.S. newspaper publishing industry. Readers’ preference for accessing news online, mostly free, has made the industry’s print-advertising model increasingly irrelevant. This has forced newspaper publishing companies to diversify their revenue base, trim their operations, resort to restructure, revamp their print editions and invest in digital initiatives. Let’s take a look at analysts’ expectation from Gannett’s fourth-quarter results.

What to Expect?

The Zacks Consensus Estimate for the quarter under review is pegged at 47 cents, reflecting a year-over-year decrease of 6%. Notably, the consensus estimate has been flat over the past 30 days. Analysts polled by Zacks expect revenues of $548.5 million, down over 2% from the year-ago quarter.

Factors Influencing This Quarter

Gannett’s top line in the fourth quarter is likely to be hurt by decline in circulation revenues. Analysts polled by Zacks expect circulation revenues of $290 million, down 2.6% year over year. Moreover, advertising revenues are anticipated to be $512 million, down 0.3% from the prior-year quarter.

Nevertheless, Gannett, which shares space New Media Investment Group Inc. (NYSE:NEWM) , seems to be realigning its cost structure and streamlining operations to increase efficiencies and safeguard the company’s earnings as well as cash flows from dwindling print advertising revenues. The stock also remains focused on improving its digital business with an aim to lower dependency on soft print media business and traditional advertising. Furthermore, Gannett has undertaken strategic acquisitions in order to strengthen its position in the industry.

Gannett Co., Inc. Price, Consensus and EPS Surprise

What the Zacks Model Unveils?

Our proven model does not show that Gannett is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Gannett has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 47 cents. Although the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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