The Zacks Analyst Blog Highlights: New York Times, InterActive, Penske Automotive Group, Lithia Motors and Automotive
CHICAGO, Oct. 25, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include The New York Times Company (NYSE: NYT), InterActiveCorp (Nasdaq: IACI), Penske Automotive Group, Inc. (NYSE: PAG), Lithia Motors (NYSE: LAD) and Sonic Automotive (NYSE: SAH).
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Here are highlights from Wednesday's Analyst Blog:
NY Times Offloads Assets
The current economic situation doesn't seem all well for publishing companies, who are bearing the brunt of waning advertising demand. So, the companies are streamlining their cost structure, strengthening their balance sheet, and rebalancing their portfolio. Moreover, they are looking for new revenue generating avenues to lessen their dependency on traditional advertising revenue.
Publishing companies have been divesting assets that have no direct relation to the core operations. The New York Times Company (NYSE: NYT) recently completed the sale of About Group, which it acquired in 2005, to InterActiveCorp (Nasdaq: IACI) for a consideration of $300 million. The About Group segment comprises the websites About.com, ConsumerSearch.com and Caloriecount.com, along with other related businesses.
The decision came on the back of declining revenues. About Group's revenue dropped 8.7% in the second quarter of 2012 due to fall witnessed in both cost-per-click and display advertising. During the first quarter, the revenue declined 23.1%.
Prior to this, in May 2012, The New York Times Company divested its remaining stake (210 Class B units) in the Fenway Sports Group, the owner of the Boston Red Sox and the Liverpool Football Club, for $63 million.
Another example of shedding the assets by the company is the sale of Regional Media Group in December 2011, – consisting of 16 regional newspapers, print publications and associated ventures – to Halifax Media Holdings LLC, the proprietor of The Daytona-Beach News Journal in Florida, for approximately $143 million.
The publishing industry has been struggling with sinking advertising revenue as more readers are gradually choosing free online news, thereby making the print-advertising model increasingly irrelevant. To curb shrinking advertising revenue and seek new revenue avenues, the publishing companies contemplated charging readers for online content.
Despite hiccups in the economy, what still promises a guaranteed revenue generation avenue is The New York Times Company's pricing system for NYTimes.com, which was launched on March 28, 2011. The company notified that the number of paid digital subscribers for The Times and the International Herald Tribune reached 509,000 at the end of the second quarter of 2012, reflecting a jump of about 12% since March 18, 2012.
The company also launched a pay and read model for BostonGlobe.com for a weekly subscription of $3.99. The number of paid digital subscribers reached 23,000 at the end of the quarter, representing an increase of 28% since March 18, 2012.
Penske Auto Raises Dividend
Penske Automotive Group, Inc. (NYSE: PAG) raised its dividend payment by 8.3% to 13 cents per share for the third quarter of 2012 from 12 cents. The increased dividend is payable on December 3, 2012 to shareholders of record as on November 12, 2012.
Penske raises dividend almost every year. This is the third time the company has increased its dividend payment in a year. In the first quarter of 2012, the raise was 10% to 11 cents per share, while in the second quarter of the year; it was 9.1% to 12 cents per share.
The Zacks #2 Rank (Buy) company saw an impressive 31% rise in adjusted earnings per share to 55 cents in the second quarter of 2012 compared to 42 cents per share in the corresponding quarter last year. With this, profits surpassed the Zacks Consensus Estimate by a penny. In absolute terms, profits escalated 26.4% to $49.5 million compared with $39.2 million in the year-ago quarter.
Revenues increased 19.2% to $3.4 billion in the reported quarter, surpassing the Zacks Consensus Estimate of 3.3 billion. The revenue growth was attributable to a 20.9% increase in retail sales to 84,346 units.
Penske Automotive Group sells new and previously owned vehicles along with finance and insurance products. It operates 340 retail automotive franchises, providing 41 different brands and 30 collision repair centers. Apart from its franchises in the U.S. and Europe, the company offers repair and maintenance services to the brands it sells.
The company's product mix, including a wide range of imported and luxury brands, helps it maintain a strong foothold in both the U.S. and international markets. It competes with Lithia Motors (NYSE: LAD) and Sonic Automotive (NYSE: SAH). The company will release its third quarter results on October 30.
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