Friday, August 04, 2023
Lee Enterprises, Incorporated provides local news, information, and advertising primarily in midsize markets in the United States. It publishes 49 daily newspapers, as well as offers 300 weekly newspapers and specialty publications in 23 states. The company also provides online advertising and services; and online infrastructure and online publishing services for approximately 1,500 daily and weekly newspapers and shoppers. In addition, it offers commercial printing services. The company has a strategic alliance with Yahoo!, Inc. to provide its classified employment advertising customer base the opportunity to post job listings and other employment products on Yahoo!�s HotJobs national platform. Lee Enterprises, Incorporated was founded in 1890 and is based in Davenport, Iowa.
Michael Kupinski, Director of Research, Equity Research Analyst, Digital, Media & Technology , Noble Capital Markets, Inc.
Patrick McCann, CFA, Research Analyst, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Solid Q3 results. The company reported fiscal Q3 revenue and adj. EBITDA slightly below our expectations. Revenue was $171.3 million and adj. EBITDA was $23.2 million, compared with our estimates of $174.0 million and $25.6 million, respectively. Revenue was impacted by self induced cuts in its print business, the savings of which will flow through fiscal 2024 as well. While Q3 results were slightly lower than our estimates, we view the quarter favorably given strong digital revenue growth of 14.8% and improved print margins.
Strong digital growth. The company’s digital business had another strong quarter, with total digital revenue growing a strong 14.8%, comprising 41% of total company revenues. Notably, the company has been leading the industry in digital subscriber growth for the last 14 quarters, growing at a CAGR of 44%. Digital subscribers reached 606,000 and subscription revenue grew 43% from the prior year period. In our view, its goals of 900,000 Digital subscribers and $100 million in Digital subscription revenue by 2026 appears well within its reach.
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