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Why Lee Enterprises, Incorporated Shares Popped

By Alex Planes – Feb 6, 2014 at 4:12PM

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Is this meaningful? Or just another movement?

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Lee Enterprises, Incorporated (LEE 1.06%) are up more than 8% after peaking at a 10% gain in early trading today. Investors reacted favorably to the company's preliminary earnings report, which showed an encouraging improvement in digitally sourced revenue despite weak results otherwise.

So what: Lee Enterprises reported revenue of $177.4 million for its fiscal first quarter, a 4% decline from the year-ago quarter. Adjusted quarterly net earnings rose to $0.24 per share from $0.20 a year ago, although without adjustments, Lee's EPS was $0.22, down from $0.28 a year ago.

Retail ad revenues were down 4%, and classified ad revenues were down 9%, but digital advertising and marketing revenues were up 10% year over year, and now comprise 15% of Lee's total ads-and-marketing revenues. Total digital revenue was up 13% year over year, and now comprises 12% of all revenues.

Now what: This isn't exactly an encouraging report, all things considered. The growth in mobile revenue hasn't offset all other declines, and online advertising is a difficult way to make money for even the best news publications. After a near triple during the past year, this little stock looks like it might have gotten too far ahead of itself.

Want more news and updates? Add Lee Enterprises to your Watchlist now.

Alex Planes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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 Motley Fool has a disclosure policy.

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