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The McClatchy Company Message Board

  • watchthedownside watchthedownside Sep 11, 2012 11:30 AM Flag

    Should be worth $2.75 to $3.00/share by end of this year

    ....just my two cents on valuation.......$0.60 eps estimate for next year x (8.5-3.5) = $3.00...this assumes S&P 500 ends the year above 1400, if lower, than one must scale down my MNI valuation.

    ....companies that do not grow should be worth 8.5x eps based on 100 years of history for the U.S. stock market......have a very hard time seeing MNI shrink revenue by more than 3.5% per year over the next 10 years regardless of what you are seeing is in many of the key retirement areas of the country and population of 65+ will double over the next 20 years (and readership is flat or falling at much smaller rate compared to younger generation) my conservative calculation, older readership drops to 40% from 60% over the next 20 years as population doubles to 50mm from 25mm and 18-64 year older readership drops to 15% from 40% as that population increases to 120mm from 100mm....therefore this (quite conservatively i may add) assumes that readership picks up 5mm new older folks and loses 22mm younger folks, for a net loss of 17mm on an original base of 55mm = 38/55 = (.69)^.05 = 1.8% per year drop in readership over 20 years.....I also assume that advertisers drop double this rate and that there are no price increases over 20 years to get my 3.50% annual drop in revenue!!!

    as a check on my valuation thoughts, management sold earlier in March at average $2.60 per share, increase this by cost of capital into year end and you get $2.80 per share.

    again, just my two cents, take it for what it is.

    Sentiment: Hold

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