Gannett's stock finished at $11.56 a share, up 87 cents, or a whopping 8.1% -- ranking its performance in the middle of a group of shares I follow. (See chart, above. Bigger spreadsheet.)
The Dow Jones Industrial Average jumped 255 points, or 2.3%, to 11,539. The S&P 500 index, a broader measure of overall market activity, rose 2.8%, to 1,210.
Yet, even with yesterday's gains, publishers have a tough slog ahead in order to recover year-to-date losses. For one, GCI is still down 23.4% since the start of the year -- once more, in the middle of the pack. The S&P, meanwhile, is down a far smaller 3.8%.
Entering the final stretch of the current quarter, the revenue outlook isn't encouraging, The Wall Street Journal's Russell Adams reported last week.
"Newspaper companies are resetting their advertising expectations," he wrote, "after a discouraging first half of the year, a shift that could spur a return to more of the job cuts and other belt-tightening moves that spread through the industry in 2008 and 2009."
"Right now," one newspaper executive told him, "I'd have a hard time presenting a plan with revenues flattening out."
Those layoffs, stock buyback announcement and dividend hike have done little to impress anyone. So its back to the drawing board, gracia. Furlough time!
ReplyDeleteOn the contrary, the dividend hike is one of the reasons the stock price is where it is. GCI is a cash-flow machine whether you want to acknowledge it or not. Companies facing demise do not pay dividends, much less raise them. The market knows this.
ReplyDeleteOn any solid evidence that GCI is successfully defending its prodigious cash flow this is a $20 stock. That would take evidence that the company is a. staunching the revenue bleed and b. successfully building a sustainable digital future. If these things happen in the midst of a generally buoyant stock market, which doesn't exist today, then GCI is possibly a $30 stock. Meantime, patient investors are being paid to wait in the form of a dividend.
A company troll? No. I am a former newsroom employee who dislikes the company intensely but separates emotion from business. Sometimes, the heart should rule the head. Sometimes, it should be the other way around. Knowing the difference . . . well, that's called successful living.
9;37, i like your point of view, but respectfully reject your premise. The stock price is guided by results and expectations of growth. Cash flow for sure, but a lesser component in factoring a valuation for the stock now and in the future. And keep in mind that gannett once paid out $1 a share in divs, not 8 cents. Do you really thknk the stock will double or triple based on current or declining cash flow?
ReplyDeleteI'm another former newsroom employee who hates the company intensely (that narrows me down to a field of 30,000 or so).
ReplyDeleteBut I think corporate is too stupid to properly leverage their cash flow, preferring to put as much of it in their own pockets. Or hire another round of VPs, rather than reinvest it in something that will grow the company.
Trouble is, The Street knows this too.