Earnings Update: Here's Why Analysts Just Lifted Their Tribune Publishing Company Price Target To US$15.50

There's been a notable change in appetite for Tribune Publishing Company (NASDAQ:TPCO) shares in the week since its annual report, with the stock down 10% to US$10.24. It was an okay result overall, with revenues coming in at US$983m, roughly what analysts had been expecting. This is an important time for investors, as they can track a company's performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

View our latest analysis for Tribune Publishing

After the latest results, the consensus from Tribune Publishing's lone analyst is for revenues of US$904.7m in 2020, which would reflect a measurable 8.0% decline in sales compared to the last year of performance. Earnings are expected to improve, with Tribune Publishing forecast to report a statutory profit of US$0.63 per share. Before this earnings report, analysts had been forecasting revenues of US$947.3m and earnings per share (EPS) of US$0.45 in 2020. Although analysts have lowered their sales forecasts, they've also made a considerable lift to their earnings per share estimates, which implies there's been something of an uptick in sentiment following the latest results.

There's been a 6.9% lift in the price target to US$15.50, with analysts signalling that the higher earnings forecasts are more relevant to the business than the weaker revenue estimates.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. One more thing stood out to us about these estimates, and it's that Tribune Publishing's decline is expected to slow down, with revenues forecast to fall 8.0% next year, improving on a historical decline of 14% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the market are forecast to see their revenue decline 3.9% per year. So while it's not great to see that analysts are expecting a decline, at least Tribune Publishing is forecast to shrink at a slower rate than the wider market.

The Bottom Line

The most important thing to take away from this is that analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Tribune Publishing following these results. Unfortunately, analysts also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider market. Even so, earnings per share are more important to the intrinsic value of the business. Yet - earnings are more important to the intrinsic value of the business. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Tribune Publishing. Long-term earnings power is much more important than next year's profits. We have analyst estimates for Tribune Publishing going out as far as 2021, and you can see them free on our platform here.

You can also see our analysis of Tribune Publishing's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

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