Investors in Gannett Co., Inc. (NYSE:GCI) had a good week, as its shares rose 6.9% to close at US$4.02 following the release of its second-quarter results. Although revenues of US$585m were in line with analyst expectations, Gannett surprised on the earnings front, with an unexpected (statutory) profit of US$0.42 per share a nice improvement on the losses that the analystsforecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the four analysts covering Gannett provided consensus estimates of US$2.33b revenue in 2025, which would reflect a discernible 2.5% decline over the past 12 months. Statutory earnings per share are forecast to tumble 64% to US$0.29 in the same period. Before this latest report, the consensus had been expecting revenues of US$2.36b and US$0.079 per share in losses. Although we saw no serious change to the revenue outlook, the analysts have definitely increased their earnings estimates, estimating a profit next year, compared to previous forecasts of a loss. So it seems like the consensus has become substantially more bullish on Gannett.
See our latest analysis for Gannett
There's been no major changes to the consensus price target of US$5.76, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Gannett, with the most bullish analyst valuing it at US$8.00 and the most bearish at US$3.50 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gannett's past performance and to peers in the same industry. One thing that stands out from these estimates is that revenues are expected to keep falling until the end of 2025, roughly in line with the historical decline of 6.2% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenue grow 3.5% per year. So while a broad number of companies are forecast to grow, unfortunately Gannett is expected to see its revenue affected worse than other companies in the industry.
The Bottom Line
The most important thing to take away is that there's been a clear step-change in belief around the business' prospects, with the analysts now expecting Gannett to become profitable next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$5.76, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Gannett. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Gannett going out to 2027, and you can see them free on our platform here..
You still need to take note of risks, for example - Gannett has 3 warning signs (and 2 which can't be ignored) we think you should know about.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.