Report: McClatchy stock ‘could be worthless’
Woes for McClatchy just keep piling up. A new Morningstar report say shares in the company “could be worthless.”
Stock analyst Tom Corbett wrote, “After lowering our sales and profitability forecast, we’ve reduced our fair value estimate on McClatchy’s shares to $0 from $2 each. We think the combination of McClatchy’s exposure to the decline in print ad revenue, high fixed costs, and substantial debt burden, is such that the firm will eventually have to be managed to satisfy its obligations to its creditors at the expense of its equity shareholders.”
McClatchy stock (NYSE: MNI) closed Friday at $1.63, down 36 cents, or 18 percent. In the past 52 weeks, McClatchy shares have lost 87.5 percent of their value.
Corbett’s report traces McClatchy’s woes to its 2006 acquisition of Knight Ridder for $4.6 billion. Since then, McClatchy has struggled with “declining revenues, high debt, outsized exposure to troubled housing markets, and the continuing shift of readers and advertisers from print to online,” Corbett wrote. “Given the persistence and severity of these conditions, we think equity shareholders are at risk of losing the entire value of their investment.”
Editor and Publisher has more.
We last wrote about McClatchy here.
