Will The New York Times Co. Surge Higher?

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With shares of The New York Times Co. (NYSE:NYT) trading around $11, is NYT an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

The New York Times Co. is a global multimedia news and information company that includes newspapers, digital businesses, investments in paper mills, and numerous other investments. The company operates in two divisions: New York Times Media Group and New England Media Group. The New York Times Group includes The New York Times, the International Herald Tribune, NYTimes.com and related businesses. The New England Media Group included the the Boston Globe, BostonGlobe.com, Boston.com, the Worcester Telegram & Gazette, Telegram.com and related businesses.

The New York Times Co. recently delivered a profit that beat Wall Street’s expectations. However, it came up short on revenue expectation. Also, the company has finally agreed to sell its historic Boston Globe newspaper, with Boston Red Sox owner John Henry stepping in to buy the publication. The deal only saw a purchasing price of $70 million, compared to $110 million when factoring in all the companies assets and liabilities.

T = Technicals on the Stock Chart are Strong

New York Times Co. stock has been soaring higher over the last several months. The stock has pulled back from highs for the year, so it may need to spend some time at current prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, New York Times Co. is trading above its rising key averages, which signal neutral to bullish price action in the near term.

The New York Times Co.

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of New York Times Co. options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

New York Times Co. Options

31.35%

3%

1%

What does this mean? This means that investors or traders are buying a minimal amount of call and put options contracts as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

August Options

Flat

Average

September Options

Flat

Average

As of Monday, there is average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on The New York Times Co.’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for The New York Times Co. look like and more importantly, how did the markets like these numbers?

2013 Q2

2013 Q1

2012 Q4

2012 Q3

Earnings Growth (Y-O-Y)

27.27%

-92.86%

191.00%

-80.00%

Revenue Growth (Y-O-Y)

-5.79%

-2.00%

5.19%

-0.56%

Earnings Reaction

-3.36%

4.99%

3.27%

-21.97%

The New York Times Co. has seen mixed earnings and revenue figures over the last four quarters. From these numbers, the markets have had mixed feelings about New York Times’s recent earnings announcements.

P = Excellent Relative Performance Versus Peers and Sector

How has New York Times Co. stock done relative to its peers – Gannett (NYSE:GCI), News Corp. (NASDAQ:NWSA), McClatchy Co. (NYSE:MNI) — and sector?

The New York Times Co.

Gannett

News Corp.

McClatchy Co.

Sector

Year-to-Date Return

26.68%

21.10%

0.95%

27.57%

18.73%

The New York Times Co. has been a relative performance leader, year-to-date.

Conclusion

The New York Times Co. is a news, information, and media company that has a strong presence worldwide. The company recently agreed to sell the Boston Globe portion of its business. The stock has been rising but has now pulled back from yearly highs, so it may need some time before it gets going. Over the last four quarters, investors have had mixed feelings among investors, as earnings and revenue figures have been up and down. Relative to its peers and sector, New York Times Co. has been a year-to-date performance leader. Look for The New York Times Co. to OUTPERFORM.

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