Can you guess what media company is debt-free, has a surging stock price, and is in far better financial shape than the vast majority of its competitors? The answer is the New York Times Co. (NYSE: NYT).
The New York Times? Isn’t that a newspaper publisher, a sector that the internet has made as relevant as a horse-and-buggy? After declaring that he would never sell a newspaper, didn’t Warren Buffett unload his papers in January after losing hope that the sector would rebound?
Of course, the answers to all those questions is “yes.”
Far From "Failing" Mr. Trump
Think of the Times as the best house in a sketchy neighborhood. On second thought, make that a mansion
Shares of the New York-based company have soared more than 30% this year, outperforming the S&P 500 Index, which has gained about 8% during that same time. The company’s shares closed at $42.76 on Friday. That’s 185% higher than the combined share prices of Gannett ($1.44), Tribune Publishing ($12.64), and Lee Enterprises (90 cents) of $14.98.
The New York-based company trades at a premium price-to-earnings multiple of 52 that appears justified.
For one thing, the Times is sitting on about $800 million in cash and marketable securities thanks to some savvy moves undertaken by chairman Arthur Sulzberger Jr.
The company borrowed $225 million at the Great Recession height in 2009 through a sale/leaseback of 23 stories of its Manhattan headquarters. It regained control of the property in 2019 for $250 million. According to Huber Research Analyst Doug Arthur, the building is now worth $1 billion.
Arthur also credits Sulzberger with investing in the company’s “product” -- the newsroom –when many publishers were cutting spending –maintaining high quality. The company gives readers plenty of reasons for people to come to its website regardless of whether they agree with the paper’s outlook. Its bombshell series on President Donald Trump’s taxes is a case in point. For in-depth investigative journalism there are a few options left; The New York Times remains essential in this regard.
A Premium Play In a Mostly Free Industry
Earlier in the decade, Sulzberger also defied skeptics when he began charging readers to access its website because most publishers were giving their content away for free.
“Everyone thought The New York Times was crazy and that it was going to fail," Arthur told Forbes.
The company has about 6 million subscribers to the NYT.com and will easily beat its goal of having 10 million subscriptions by 2025.
During the second quarter, the company’s online business generated more revenue than its legacy print operations for the first time, a key milestone in the eyes of Wall Street.
As Times Publisher from 1992 to 2017, Sulzberger kept the Sulzberger-Ochs family, which has controlled the Times since 1896, “together” at a time when many family-owned publishers such as Dow Jones, Times-Mirror, and Knight-Ridder sold under pressure from Wall Street.
Sulzberger was succeeded as publisher by his son A.G. Sulzberger will also take over as Times chairman when his father retires from that position in January.
Analysts think the company’s stock has got more good news ahead. Their average 52-week price target on the stock is $46.67, indicating a potential upside of more than 6%.
One analyst has a $59 stock price estimate on the Times, a gain of more than 30% from its current level.
That’s not too shabby for a company that President Donald Trump has repeatedly called “failing.”