Investment: Downturn test for Newsquest
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.NEWSQUEST, England's largest regional and local newspaper publisher, has suffered badly during the market turbulence of the past three months. Although yesterday's third-quarter profit announcement was better than expected - profits increased by 48 per cent to pounds 14.3m - investor faith has still to be renewed. The share price is still 27 per cent below its July peak of 340p.
Because the publication of local newspapers is Newsquest's core activity, it relies on advertising for the bulk of its revenues. Most analysts believe that, if there were a significant downturn in the economy, Newsquest's earnings from recruitment ads - 20 per cent of its overall advertising revenue - would be badly hit, with its operations outside London and the South-east most affected.
Analysts are sticking to forecast profits of pounds 65m for the full year and earnings of 22.2p per share. With the stock trading up 8p to 250p on the back of this release, the forward earnings multiple is still above 11.
Analysts will agree that there is not much fundamentally wrong with the company, and that it is undervalued in the long term. Due to the cyclical nature of its earnings, however, there is still some scepticism about short-term prospects, and the share price may have some way to slide as the economy slows.
Potential investors would be well advised to bide their time before climbing aboard.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments