By: Mark Fitzgerald Shares of The Washington Post Co. -- which had been able to resist the downward pressure on stocks with its mix of media properties -- hit an 11-year low Thursday as an analyst warned of a it faces a "liquidity squeeze" in the U.S. credit lock-up.
Post stock (NYSE: WPO) had already opened trading Thursday at a new 52-week low, but after the noontime release of the report by Zacks Investment Research it dropped sharply.
The stock hit an intraday trading low of $405 -- the lowest price since November 1997, when it averaged $401.37. Shares rebounded slightly, closing at $406.70, a drop of $58, or 12.48%.
Post stock has been hit hard in the past year, trading well off a 52-week high of $880 a share. But that fall-off is well below the plunge in share price experienced by such publishers as McClatchy and Lee Enterprises. The Post describes itself not as a newspaper publisher, but as an "education and media company," and its stock has been buoyed by the success of its Kaplan education services and publishing company and its cable television operations.
Zacks analyst Ann Northrop's report, though, noted that more than two-thirds of the company's revenue "comes from businesses in secular decline -- newspapers and broadcasting," operating in a weak ad environment that doesn't look to improve.
Zacks portrayed the stock as expensive, saying it is trading at 14.3 times its 2009 estimated earnings per share, "a substantial premium to our estimate of its 5-year growth rate." Post shares also pay "a low dividend at a time of high uncertainty," the analyst added.
"Given the tight credit markets, the company could face a liquidity squeeze when the bulk of its $499.0 million in debt comes due in February 2009," Northrop wrote.
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