The New York Times Company NYT released its fourth-quarter 2024 results before the opening bell last Wednesday, sparking fresh debate among investors regarding the stock's future trajectory. The company has made significant strides in digital transformation, but still, with a challenging media landscape and rising costs, the key question remains: Is NYT stock a buy or sell after its latest earnings?
NYT’s Q4 Earnings Snapshot
The New York Times Company continued its solid performance in the final quarter, with both revenues and earnings surpassing the Zacks Consensus Estimate and improving year over year. The company added approximately 350,000 net digital-only subscribers during the quarter compared with the end of the preceding quarter, propelled by multiple products across its portfolio.
A key highlight was the continued growth in digital-only average revenue per user (ARPU). ARPU increased to an impressive $9.65 in the fourth quarter from $9.24 in the year-ago period. This rise in ARPU can be attributed to subscribers transitioning from promotional pricing to higher rate plans and price hikes for tenured non-bundle subscribers. (Read: The New York Times Q4 Earnings Top, Subscription Revenues Up 8.4% Y/Y)
From a revenue perspective, The New York Times Company saw an 8.4% year-over-year increase in subscription revenues, reaching $466.6 million. Total advertising revenues rose 0.6% year over year to $165.1 million. However, print advertising revenues fell sharply by 16.4% to $47.1 million, primarily due to weakness in the luxury, classifieds and entertainment categories.
While digital-driven growth remains a bright spot, the ongoing decline in print advertising remains a drag on overall performance.
How Consensus Estimates Stack Up for NYT Post Q4 Earnings
The Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past seven days, analysts have increased their estimates for both the current quarter and fiscal year by 3 cents to 35 cents and $2.08 per share, respectively. The estimates suggest year-over-year increases of 12.9% and 3.5%, respectively.
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Why NYT Remains a Compelling Stock for Investors
The New York Times Company has made significant strides in growing its subscriber base, a key driver of its revenue expansion. The company’s strategic focus on enhancing digital subscriptions, which form a major part of its revenue mix, has paid off. By offering exclusive content, innovative digital bundles and premium experiences, NYT has successfully attracted new subscribers while retaining existing ones.
A significant factor behind The New York Times Company's success has been its ability to convert readers into paying subscribers through quality journalism and well-timed digital investments. Technological advancements have improved audience engagement, allowing the company to reach its target audience more effectively. With a larger and more engaged subscriber base, the company generates consistent, high-margin revenues, reducing its reliance on print advertising.
On its lastearnings call management projected a 7-10% year-over-year increase in total subscription revenues for the first quarter of 2025, with digital-only subscription revenues anticipated to rise 14-17%, signaling continued momentum in its digital business.
The New York Times Company's expanding subscriber base is central to its growth strategy. The Zacks Consensus Estimate indicates that the digital-only subscriber count is likely to reach 11.1 million by the end of the first quarter. This growth solidifies its influence and market standing, positioning it as an attractive platform for advertisers seeking an engaged audience.
In line with this, The New York Times Company has made significant strides in reducing dependence on traditional advertising by focusing on digital avenues. Management foresees a high-single-digit increase in digital advertising revenues for the first quarter.
A Sneak Peek Into NYT’s Valuation
Shares of The New York Times Company have declined 2.7% over the past month compared with the industry’s 5% drop.
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The New York Times Company is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 23.50, positioning it at a discount relative to the median level of 26.88 and the industry average of 25.33. This presents an attractive entry point for investors seeking exposure to the media sector.
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Buy or Sell NYT Stock Post Q4 Results?
The New York Times Company continues to showcase strong digital growth, driven by an increasing subscriber base and higher average revenue per user. Its strategic focus on digital subscriptions and premium content has helped mitigate the decline in print advertising. While valuation remains attractive compared to industry peers, broader market conditions should be considered. Investors looking for steady revenue growth and a resilient business model may find this Zacks Rank #2 (Buy) stock appealing.
Other Stocks Worth Looking
Here, we have highlighted other top-ranked stocks, namely Twilio Inc. TWLO, HubSpot, Inc. HUBS and Fortinet, Inc. FTNT.
Twilio, which provides customer engagement platform solutions, sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Twilio’s current financial-year sales and earnings suggests growth of 6.8% and 50.6%, respectively, from the year-ago reported numbers. TWLO has a trailing four-quarter average earnings surprise of 31%.
HubSpot, the leading customer platform for scaling businesses, carries a Zacks Rank #2. HUBS has a trailing four-quarter average earnings surprise of 15.4%.
The Zacks Consensus Estimate for HubSpot’s current financial-year sales and earnings calls for growth of 19.7% and 35.8%, respectively, from the year-ago reported numbers.
Fortinet, a global leader in cybersecurity solutions and services, currently carries a Zacks Rank #2. FTNT has a trailing four-quarter average earnings surprise of 24.8%.
The Zacks Consensus Estimate for Fortinet’s current financial-year sales and earnings implies growth of 13.5% and 2.5%, respectively, from the year-ago reported numbers.
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