July 31, 2018

LEE – Market expectations are for Uniform ROA to fall to levels near historical lows, while management may lack confidence in the circulation of their physical paper products


  • Lee Enterprises, Inc. (LEE:USA)currently trades near historical lows relative to UAFRS-based (Uniform) Earnings with an 8.9x Uniform P/E, implying bearish expectations for the firm. Additionally, management may have concerns about slowing sales in their core business channels, and slowing growth rates within TownNews
  • Specifically, management appears concerned that their core business of physical paper circulation faces significant macro headwinds. Physical circulation of newspapers has been trending downward in every year since 2000, and the market size for both weekday and Sunday publications has dropped by over 7 million consumers since 2015, nearly a 25% decrease. This has led LEE to invest in digital-based revenue sources such as their 82.5% stake in TownNews. However, management may have concerns about growth slowing down within that business
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