By: E&P Staff
Even as the share price of The New York Times Co. has plunged to record lows — falling below $5 a share at one point in trading Friday — the research firm Morningstar says he stock is worth barely half the price it’s fetching now.
In a report released Friday, Morningstar analyst Tom Corbett slashed the estimated “fair value” of New York Times shares (NYSE: NYT) to $3 from $10. About an hour before the close of trading Friday, Times Co. stock was trading at $5.15, down 57 cents, or 9.97%.
Many investors fled the stock Friday because of the announcement made after markets closed Thursday that the Times Co. was cutting its quarterly dividend by 74% to 6 cents a share, compared to 23 cents in the prior quarter.
Morningstar, however, writes says its downgrade is explained by the problems the Times Co. shares with other newspaper publishers: declining ad revenue, cash flow, and EBITDA (earnings before interest, taxes, depreciation, and amoritization) margins.
Details of the report are on E&P’s business-oriented blog Fitz & Jen blog.