Everyone knows that earnings season started this week with Alcoa Inc. (NYSE: AA). But in reality, the number of reporting companies is rather light. Things really get started next week.
That said, there are some huge names reporting, especially among the financials. Take Intel Corporation (NASDAQ: INTC), Google Inc. (NASDAQ: GOOG), JPMorgan Chase & Co. (NYSE: JPM), Citigroup Inc. (NYSE: C), Bank of America Corporation (NYSE: BAC) and General Electric Company (NYSE: GE), for example.
But we’re going to go in another direction, to an industry that most have given up for dead. It’s Gannett Co., Inc. (NYSE: GCI), the newspaper publisher that counts USA Today among its premier papers. Unlike most of its competitors, GCI is profitable thanks mainly to USA Today and firming advertising trends.
On the charts, the stock has bounced off a six-month low to reclaim its key 200-day moving average. Although several trendlines remain overhead, a return to the June high around $17 or the April high above $18 is possible with a decent earnings report.
The sentiment backdrop heading into Friday’s earnings release is favorable for an upside surprise. The put/call ratio is coming off an annual high, suggesting increased buying pressure. The short-interest ratio is more than 5, which means that a short squeeze could help the stock price. Let’s also mention that the whisper number is 4 cents below the analyst estimate, so the expectation bar may be lower than it seems.
Overall expectations for newspaper companies are generally poor, and with good reason. But GCI has shown that it has figured out how to survive in a “dying” industry. Showing a profit is a major accomplishment.
Look for the stock to be rewarded after it reports earnings on Friday. Take advantage of the move with the August 14 or 15 call.
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