Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Has Gannett Become the Perfect Stock?

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing's for sure: You'll never discover truly great investments unless you actively look for them. Let's discuss the ideal qualities of a perfect stock, then decide if Gannett (NYSE: GCI  ) fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it's certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can't produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management's attention. Companies with strong balance sheets don't have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can't afford to pay too much for even the best companies. By using normalized figures, you can see how a stock's simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can't be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let's take a closer look at Gannett.


What We Want to See


Pass or Fail?

Growth 5-Year Annual Revenue Growth > 15% (7.8%) Fail
  1-Year Revenue Growth > 12% (3.4%) Fail
Margins Gross Margin > 35% 43.0% Pass
  Net Margin > 15% 8.4% Fail
Balance Sheet Debt to Equity < 50% 65.8% Fail
  Current Ratio > 1.3 1.19 Fail
Opportunities Return on Equity > 15% 20.3% Pass
Valuation Normalized P/E < 20 8.24 Pass
Dividends Current Yield > 2% 6.0% Pass
  5-Year Dividend Growth > 10% (20%) Fail
  Total Score   4 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Gannett last year, the company has picked up a point. The publisher continues to see falling revenue, but its debt-to-equity ratio has fallen and it has made two huge dividend boosts in the past year.

The newspaper business has looked like the buggy-whip industry for some time, as news consumption has increasingly moved to the Internet. That's forced big newspapers to change their business models drastically, as the old model of selling print advertising has steadily dried up in the face of heightened competition.

Gannett recently joined The New York Times (NYSE: NYT  ) and News Corp. (Nasdaq: NWS  ) in instituting pay-walls for most of its publications. New York Times has enough success with the plan that it has cut its number of free article-views in half. But despite pressure from investor Warren Buffett, Washington Post (NYSE: WPO  ) doesn't plan to institute a pay wall, and Gannett's USA Today currently comes pay-wall free as well.

Last month, Gannett disappointed investors with a poor quarterly report. The company's move toward trying to boost online revenue has borne some fruit, but overall, it hasn't been able to staunch the flood of falling overall sales. During the quarter, profits fell by around 25%, due largely to advertising revenue declines.

With the rise of the iPad as a news-consumption device, Apple (Nasdaq: AAPL  ) could be the key to Gannett's success in the future. With news apps becoming an increasingly important driver of readership, Gannett is a logical choice to bring its colorful and easy-to-read style to iPad readers. If it can succeed in making money in that arena, then Gannett could be able to turn itself around in the coming years.

Keep searching
No stock is a sure thing, but some stocks are a lot closer to perfect than others. By looking for the perfect stock, you'll go a long way toward improving your investing prowess and learning how to separate the best investments from the rest.

Gannett isn't the perfect stock, but we've got some ideas you may like better. Let me invite you to learn about three smart long-term stock plays in the Fool's latest special report. It's yours for the taking and is absolutely free, but don't miss out -- click here and read it today.

Click here to add Gannett to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned in this article. The Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of and creating a bull call spread position in Apple. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

Read/Post Comments (1) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 16, 2012, at 12:11 PM, dwilh51183 wrote:

    Buy AAPL , SELL AMZN is what you should be doing. AAPL will seal China mobile deal in next few days which means they could sell 200 million more iPhones per year. These writers are trying to scare AAPL investors into selling so they can buy ur shares and enjoy the ride up. Buy more AAPL at these levels

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1888492, ~/Articles/ArticleHandler.aspx, 10/24/2016 6:47:07 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 2 days ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:03 PM
GCI $10.43 Up +0.07 +0.68%
Gannett CAPS Rating: *****
AAPL $116.60 Down -0.46 -0.39%
Apple CAPS Rating: ****
FOX $25.91 Up +0.55 +2.17%
Twenty-First Centu… CAPS Rating: ***
GHC $468.94 Up +4.91 +1.06%
Graham Holdings CAPS Rating: ***
NYT $11.55 Down +0.00 +0.00%
The New York Times CAPS Rating: **