Analysts Expect Gannett’s 3Q10 EPS to Rise

McLEAN, VA.: Shares of Gannett have gained 9 percent over the last week in anticipation of the company’s third-quarter results reveal tomorrow. The stock (NYSE: GCI) has gone from $12.45 Oct. 7 to rise above $14 today as analysts predict a double-digit boost in earnings per share.

Chicago-based Zacks Investment Research put the current consensus estimate for the quarter at 49 cents earnings per share, or 11.4 percent growth over 3Q09. During the second quarter of this year, Gannett posted EPS of 61 cents, surpassing Zack’s estimate of 52 cents, and the 2Q09 result of 46 cents.

Zacks said its current consensus estimate has remained stable over the last week, with none among six analysts revising their estimates. Gannett has topped the Zacks consensus estimate over the last four quarters in the range of 14.3 to 22 percent, the firm said, meaning it outperformed the Zacks estimate by an average of 17.3 percent in the last four quarters.

“Gannett is diversifying its business by adding new revenue streams to make it less susceptible to economic conditions. The company is also streamlining its cost structure, strengthening its balance sheet, and rebalancing its portfolio,” Zacks said.

“Moreover, with advertisers gradually returning to the market, Gannett hinted that the rate of fall in advertising revenue is decelerating. However, the company’s high dependence on advertising revenue, which is hinges on the health of the economy, remains a potential threat. Hence, we prefer to remain Neutral at this juncture, given a sluggish economic recovery and a soft advertising spending environment.”

Zacks maintains a short-term hold recommendation on Gannett.
-- Deborah D. McAdams