By: Mark Fitzgerald
Just before noon Monday, shares of The Washington Post Co. were trading up 8.9% after Barron’s this weekend said the stock was way undervalued and could double to $900.
“Washington Post may be the most undervalued media company in America today,” wrote Barron’s Andrew Bary. “That’s because investors give it virtually no credit for Kaplan, a large and rapidly growing education division that generates more than half the company’s revenue and profit.”
Post Co. stock, which trades on the New York Stock Exchange under the symbol WPO, was trading at $484.26 just before noon, an increase from the open of $39.52. The percentage increase is unusually high for the stock which typically moves about 1% in a trading session.
Barron’s noted that WPO shares are selling for less than half their 2004, and it offered a “sum-of-the-parts” analysis suggesting the company is worth $8.5 billion, nearly double its present market capitalization.
The big stock jump Barron’s suggest would depend on the Post Co. spinning off Kaplan from its Washington Post, Newsweek and cable television businesses — an idea the controlling Graham family has steadfastly resisted.
“In whose interest is a Kaplan spinoff?” Chairman and CEO Donald Graham told Barron’s. “It would be in the interest of the investment bankers doing the deal. It wouldn’t be in the interest of Washington Post shareholders.
“Over the years, if Kaplan and the other Post properties earn more money, we’ll be rewarded in the stock market,” Graham added. “It’s been our theory since we went public in 1971.”
Post stock is up 16% from its 52-week low, well below the triple-digit increases other publicly traded newspaper companies have posted since the historic lows they hit in early 2009. Unlike some of those stocks, which traded near or below $1 a share at their bottom, WPO’s 52-week low is a still lofty $325.17 a share. Its high in that period is $495.60, set last August.