The increased incorporation of digital technology continues to be a crucial catalyst propelling sustained resilience within the publishing industry, ensuring its stability through the foreseeable future. To that end, let’s explore publishing stocks RELX PLC (RELX), Lee Enterprises (LEE), and The New York Times (NYT), which could be added to the watchlist for 2024. Read on….
The publishing industry, a broad supplier of diverse information to audiences worldwide, is poised to maintain buoyancy in the upcoming months due to the swift technological progression and content digitization.
Given this backdrop, publishing stocks RELX PLC (RELX), Lee Enterprises, Incorporated (LEE), and The New York Times Company (NYT) could be added to the watchlist for 2024.
But before we delve deeper into the fundamentals of the stocks mentioned above, let us briefly discuss the publishing industry.
The publishing industry produces and markets various content, spanning from books to music to software, delivered through mediums like newspapers, magazines, greeting cards, and more.
The Association of American Publishers’ (AAP) recently released StatShot report reflects a promising trend. Revenues for the overall publishing industry in the nine months that ended on September 2023 climbed 0.8% year-over-year, amounting to $9.4 billion.
The publishing industry’s pivotal role persists in providing compelling and enlightening information to its readers, and it exhibits the potential to prosper further with a few emerging trends. A surge in demand for digital services has paved the way for the industry to devise novel and inventive strategies to captivate audiences and streamline operations.
Today’s consumer predominantly accesses information via social media and mobile apps, prompting publishers to intensify their utilization of artificial intelligence and machine learning in the publishing processes.
The digital publishing market, which has been gaining traction, has begun harnessing AI to spur performance and efficiency while simultaneously contemplating its implications on the editorial facet of the business. The global digital publishing market is poised to reach $105.96 billion by 2027, growing at a CAGR of 13%.
Given the industry tailwinds, let’s examine the fundamentals of the three stocks to watch in the B-rated Entertainment – Publishing industry, starting with the third in line.
Stock #3: RELX PLC (RELX)
Headquartered in London, the United Kingdom, RELX provides information-based analytics and decision tools for professional and business customers. It operates through four segments: Risk; Scientific, Technical & Medical; Legal; and Exhibitions.
On December 15, Airports Council International (ACI) World and RELX’s Cirium collaborated to strengthen the Airport Service Quality (ASQ) program, the world’s leading airport customer experience measurement and benchmarking program.
The ASQ program’s methodology is renowned for its robustness, ensuring the most accurate representation of airport traffic. Cirium will serve as the reference database for flights supporting the ASQ methodology, solidifying the ASQ program’s commitment to accuracy and reliability. This should bode well for RELX.
Its annualized dividend rate of $0.70 per share translates to a dividend yield of 1.78% on the current share price. Its four-year average yield is 2.27%. RELX’s dividend payments have grown at a 6.5% CAGR over the past three years.
RELX’s trailing-12-month cash from operations of $3.13 billion is 968.8% higher than the industry average of $293.14 million. Its trailing-12-month net income and levered FCF margins of 19.23% and 18.52% are 216% and 211.2% higher than the industry averages of 6.09% and 5.95%, respectively.
In the six months that ended June 30, 2023, RELX’s revenue and adjusted operating profit increased 7.2% and 13.5% year-over-year to $5.53 billion and $1.83 billion, respectively. Moreover, its adjusted cash flow stood at $1.73 billion, up 4.1% from the year-ago period.
For the same period, adjusted net profit attributable to shareholders and adjusted earnings per share rose 11% and 12.5% from the year-ago period to $1.31 billion and $0.69, respectively.
Street expects RELX’s revenue and EPS in the fiscal year ending December 2023 to increase 13.8% and 13.1% year-over-year to $11.67 billion and $1.39, respectively.
The stock has gained 41.1% year-to-date to close the last trading session at $39.11. Over the past nine months, it has gained 24.4%.
RELX’s fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
The stock has an A grade for Sentiment and a B for Momentum and Stability. Within the B-rated Entertainment – Publishing industry, it is ranked #4 out of 8 stocks.
To see additional POWR Ratings for Growth, Value, and Quality for RELX, click here.
Stock #2: Lee Enterprises, Incorporated (LEE)
LEE provides local news and information, as well as advertising services. The company offers digital subscription platforms; daily, weekly, and monthly newspapers and niche publications; and web hosting and content management services.
LEE’s trailing-12-month ROTC of 6.03% is 69.6% higher than the industry average of 3.55%, while its trailing-12-month asset turnover ratio of 0.95x is 84.3% higher than the industry average of 0.52x.
In the fiscal fourth quarter that ended September 24, 2023, LEE’s total operating revenue and adjusted EBITDA stood at $164.01 million and $30.04 million, respectively. Moreover, its operating income came at $10.93 million, compared to an operating income of negative $3.47 million in the prior year quarter.
As of September 24, 2023, LEE’s total current liabilities stood at $114.34 million, compared to $131.14 million as of September 25, 2022.
For the fiscal year 2024, the company expects its total digital revenue to be between $310 million and $330 million, while adjusted EBITDA is expected to be between $83 million and $90 million.
Street expects LEE’s revenue in the fiscal first quarter ending December 2023 to be $165.90 million. Its revenue and EPS year in the fiscal year ending September 2024 are expected to be $651.10 million and $1.88, respectively.
The stock has gained 1.2% intraday to close the last trading session at $8.14.
LEE’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
LEE has a B grade for Value. Within the same industry, it is ranked #2.
Beyond what we’ve stated above, we have also rated the stock for Growth, Momentum, Stability, Sentiment, and Quality. Get all ratings of LEE here.
Stock #1: The New York Times Company (NYT)
NYT provides news and information for readers and viewers across various platforms worldwide. It offers The New York Times (The Times), a daily and Sunday newspaper in the U.S., and international edition of The Times; and operates the NYTimes.com website.
On December 14, NYT’s board of directors declared a regular quarterly dividend of $0.11 per share on the company’s Class A and Class B common stock, payable on January 18, 2024.
Its annualized dividend rate of $0.44 per share translates to a dividend yield of 0.96% on the current share price. Its four-year average yield is 0.74%. NYT’s dividend payments have grown at CAGRs of 22.2% and 21.3% over the past three and five years, respectively.
NYT’s trailing-12-month asset turnover ratio of 0.94x is 83.3% higher than the industry average of 0.52x. Its trailing-12-month net income and levered FCF margins of 8.09% and 12.06% are 151.8% and 57.6% higher than the industry averages of 3.21% and 7.65%, respectively.
In the fiscal third quarter that ended, NYT’s total revenues and adjusted operating profit increased 9.3% and 30.1% year-over-year to $598.35 million and $89.76 million, respectively.
For the same quarter, net income and adjusted EPS stood at $53.62 million and $0.37, up 46.4% and 54.2% from the year-ago quarter, respectively. For the nine months that ended, free cash flow increased 262.8% from the year-ago period to $207.56 million.
Street expects NYT’s revenue in the fiscal fourth quarter ending December 2023 to increase 1.8% year-over-year to $679.57 million. Its EPS is expected to be $0.58. The company surpassed consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 21.8% over the past six months to close the last trading session at $45.88. Over the past year, it has gained 41.5%.
NYT’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system.
NYT has an A grade for Quality. It is ranked first within the same industry.
Click here for the additional POWR Ratings for NYT (Growth, Value, Momentum, Stability, and Sentiment).
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
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RELX shares rose $0.22 (+0.56%) in premarket trading Friday. Year-to-date, RELX has gained 44.10%, versus a 25.48% rise in the benchmark S&P 500 index during the same period.
Sristi Suman Jayaswal
The stock market dynamics sparked Sristi’s interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy.
Having earned a master’s degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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