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Gannett's M&A Focus, Risk To Dividend And Weak Comps Lead Argus To Downgrade

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Argus downgraded Gannett Co Inc (NYSE: GCI) to Hold as the brokerage is concerned with the newspaper company's declining margins and weak same-store sales.

Argus also warned that Gannett operates in an industry facing secular decline, and its growth-by-acquisition strategy appears unsustainable.

“Management's focus on acquisitions, coupled with declining free cash flow, could also threaten GCI's financial flexibility and put the dividend at risk,” analyst John Eade wrote in a note.

See Also: The 'Failing' New York Times Now Has More Than 3 Million Subscribers, Still Has Long-Term Concerns

Eade cut his 2017 adjusted EPS estimate to $1.08 from $1.15 based expectations for continued weak comp sales and margins. Gannett expects a mid-single-digit increase in reported revenues and a slight decrease in the adjusted EBITDA margin.

Over the past quarter, Gannett shares have gained 6 percent, in line with the S&P 500. The shares have underperformed over the past year, with a 34 percent decline versus a gain of 26 percent for the index.

At last check, shares of Gannett fell 5.26 percent to $8.47.

Latest Ratings for GCI

Feb 2017Argus ResearchDowngradesBuyHold
Oct 2016MaintainsHold
Jul 2016JefferiesMaintainsHold

View More Analyst Ratings for GCI
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Posted-In: Argus John EadeAnalyst Color Downgrades Analyst Ratings


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