The New York Times Company NYT has undergone a remarkable transformation, and its recent surge in the stock price, up 21.1% in just three months, signals a compelling investment opportunity. This surge not only underscores the company's solid fundamentals but also positions NYT as an attractive choice for investors seeking growth and resilience in the dynamic media landscape. The company's ability to evolve and innovate in response to changing consumer preferences has positioned it as a formidable player.
At the core of NYT's transformation lies its capacity to expand its subscriber base, diversify revenue streams, optimize expenses and streamline operations. These strategic endeavors have played a pivotal role in driving its outstanding performance. Through strategic acquisitions like Wirecutter, a platform for product reviews and The Athletic, a digital sports media business operating on a subscription model, the company has substantially broadened its reach and unlocked novel market opportunities.
A Look at Driving Factors
The New York Times Company boasted an impressive 9.88 million subscribers across its print and digital products at the end of second-quarter 2023. Of the 9.88 million subscribers, approximately 9.19 million were digital-only subscribers. Of the digital-only subscribers, about 3.30 million were bundle and multiproduct subscribers. There was a net increase of 180,000 and 780,000 digital-only subscribers compared with the preceding quarter and the second quarter of 2022, respectively.
Subscription revenues reached a substantial $409.6 million, showcasing a year-over-year increase of 6.8%. The upside can be attributed to the rise in the number of subscribers who are paying higher prices, more individuals subscribing to the company's digital-only products and others upgrading to bundle packages. We note that subscription revenues from digital-only products jumped 13% to $269.8 million.
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Impressively, there has been a noticeable improvement in subscription revenues compared to the prior-year quarter. The average revenue per user (ARPU) for digital-only subscriptions increased to $9.15 in the second quarter from $9.04 in the preceding quarter and $8.83 in the same period last year.
Projections for the third quarter of 2023 also point to a substantial increase in total subscription revenues, with digital-only subscription revenues expected to climb even higher. Management envisions third-quarter 2023 total subscription revenues to increase about 8-10%, with digital-only subscription revenues anticipated to rise approximately 14-17%.
The New York Times Company has achieved notable success in the face of operational challenges, driven by an expanding subscriber base and a well-executed strategic transformation. Rooted in New York, this Zacks Rank #1 (Strong Buy) company has leveraged technological advancements to forge robust connections with its audience. As The New York Times Company continues to adapt and innovate, its prospects remain promising.
3 More Stocks Worth Looking
Some other top-ranked stocks are StoneCo Ltd. STNE, Reservoir Media RSVR and Pearson plc PSO.
StoneCo, a leading provider of financial technology and software solutions, carries a Zacks Rank #2 (Buy) and has an expected EPS growth rate of 55.2% for three to five years. The company has a trailing four-quarter earnings surprise of 28.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for StoneCo’s current financial-year sales and EPS suggests growth of 4.7% and 130.3%, respectively, from the year-ago period.
Reservoir Media, which operates as a music publishing company, carries a Zacks Rank #2. RSVR has a trailing four-quarter earnings surprise of 10%, on average.
The Zacks Consensus Estimate for Reservoir Media’s current financial-year revenues calls for growth of 8.2% from the year-ago period. RSVR has an expected EPS growth rate of 10% for three to five years.
Pearson, a global educational publishing and services company, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.2%.
The Zacks Consensus Estimate for Pearson’s current financial-year revenues and EPS implies growth of 1.2% and 14.1%, respectively, from the year-ago reported figure.
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