Lee Enterprises (LEE) AI Stock Analysis

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Lee Enterprises

(NASDAQ:LEE)

37Underperform

Lee Enterprises faces significant financial challenges with negative equity and declining cash flow. While technical analysis suggests bearish momentum, there are some positive aspects in digital revenue growth and strategic initiatives highlighted in the earnings call. However, the overall outlook remains primarily negative due to substantial financial risks and poor valuation metrics.

Lee Enterprises (LEE) vs. S&P 500 (SPY)

Market Cap

$55.47M

Dividend YieldN/A

Average Volume (3M)20.12K

Price to Earnings (P/E)―

Beta (1Y)1.36

Revenue Growth-9.28%

EPS Growth-647.14%

CountryUS

Employees2,674

SectorCommunication Services

Sector Strength98

IndustryPublishing

Share Statistics

EPS (TTM)-7.21

Shares Outstanding6,190,939

10 Day Avg. Volume16,205

30 Day Avg. Volume20,124

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.11

Price to Cash Flow (P/CF)-2.20

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$25.00

Price Target Upside183.77% Upside

Rating ConsensusHold

Number of Analyst Covering0

Lee Enterprises Business Overview & Revenue Model

Company DescriptionLee Enterprises (LEE) is a leading provider of local news, information, and advertising in the United States. Operating primarily in the print and digital media sectors, the company owns a portfolio of daily newspapers, digital products, and specialized publications. Lee Enterprises serves a diverse audience with a focus on delivering high-quality local news content across various platforms.

How the Company Makes MoneyLee Enterprises generates revenue primarily through advertising and subscription services. Advertising revenue is derived from sales of print and digital ads to local and national businesses. The company also earns money from subscription fees charged to readers for access to its digital and print news content. Additionally, Lee Enterprises benefits from partnerships with other media organizations, which can include content-sharing agreements and joint advertising sales initiatives. The company's earnings are influenced by factors such as readership trends, print circulation, digital engagement, and the overall economic environment affecting advertising budgets.

Lee Enterprises Financial Statement Overview

Summary

Lee Enterprises is experiencing financial difficulties, with declining revenue, profitability, and cash flow metrics. The balance sheet indicates high leverage and negative equity, posing significant financial risks.

Income Statement

Negative

Lee Enterprises shows declining revenue and profitability metrics. Gross and net profit margins have been negative, with a significant net loss in the TTM. The EBIT and EBITDA margins have also contracted, indicating profitability challenges.

Balance Sheet

Very Negative

The balance sheet reveals a negative stockholders' equity, indicating financial instability and high leverage. The debt-to-equity ratio is unfavorable due to the absence of equity, and the equity ratio is negative, suggesting solvency issues.

Cash Flow

Negative

The company faces negative free cash flow and operating cash flow, with declining free cash flow growth. The operating cash flow to net income ratio is negative, reflecting cash flow challenges and profitability issues.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
600.26M	611.38M	691.14M	780.97M	794.65M	618.00M
	Gross Profit
458.07M	611.38M	665.79M	750.87M	764.87M	593.76M
	EBIT
3.91M	4.55M	37.17M	73.97M	56.56M	50.28M
	EBITDA
22.32M	37.66M	69.01M	105.55M	97.75M	95.16M
	Net Income Common Stockholders
-42.76M	-23.57M	-5.27M	899.00K	22.75M	-1.26M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
20.02M	9.60M	14.55M	16.18M	26.11M	33.73M
	Total Assets
1.48B	649.17M	711.62M	744.04M	843.55M	864.06M
	Total Debt
1.15B	37.91M	500.08M	516.42M	548.91M	609.24M
	Net Debt
1.13B	37.91M	485.53M	500.23M	522.80M	575.51M
	Total Liabilities
1.43B	656.50M	687.91M	726.80M	786.85M	893.69M
	Stockholders Equity
46.93M	-9.89M	21.24M	15.01M	54.56M	-31.56M
Cash Flow		Free Cash Flow
-16.03M	-8.09M	-7.63M	-4.11M	42.60M	41.77M
	Operating Cash Flow
-6.30M	1.12M	-2.52M	3.43M	50.08M	49.87M
	Investing Cash Flow
5.50M	3.73M	7.98M	6.34M	-2.28M	-118.18M
	Financing Cash Flow
-8.44M	-9.80M	-7.09M	-20.27M	-55.42M	93.39M

Lee Enterprises Technical Analysis

Technical Analysis Sentiment

Negative

Last Price8.81

Price Trends

50DMA

10.16

Negative

100DMA

12.57

Negative

200DMA

11.90

Negative

Market Momentum

MACD

0.02

Negative

RSI

56.45

Neutral

STOCH

68.79

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LEE, the sentiment is Negative. The current price of 8.81 is below the 20-day moving average (MA) of 9.59, below the 50-day MA of 10.16, and below the 200-day MA of 11.90, indicating a bearish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 56.45 is Neutral, neither overbought nor oversold. The STOCH value of 68.79 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LEE.

Lee Enterprises Risk Analysis

Lee Enterprises disclosed 16 risk factors in its most recent earnings report. Lee Enterprises reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Lee Enterprises Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SSP	80 Outperform	$209.23M	2.24	11.68%	―	9.46%	―
NXST	79 Outperform	$4.86B	7.45	31.65%	4.35%	9.61%	128.67%
NYT	69 Neutral	$7.91B	27.30	15.92%	1.07%	6.59%	26.68%
Sector *	58 Neutral	$26.94B	3.15	-10.67%	4.32%	2.14%	-43.11%
MEG	48 Neutral	$441.27M	―	-12.30%	―	11.56%	-40.46%
GCI	44 Neutral	$433.27M	―	-11.19%	―	-5.79%	-10.12%
LEE	37 Underperform	$55.47M	―	0.00%	―	-9.28%	-647.14%

* Communication Services Sector Average

Performance Comparison

LEE

Lee Enterprises

8.81

-3.87

-30.52%

SSP

E. W. Scripps Company Class A

2.22

-1.02

-31.48%

NYT

New York Times

47.87

4.66

10.78%

NXST

Nexstar Media Group

152.98

-3.32

-2.12%

GCI

Gannett

2.73

0.32

13.28%

MEG

Montrose Environmental Group

12.78

-32.33

-71.67%

Lee Enterprises Earnings Call Summary

Earnings Call Date: Feb 6, 2025 | % Change Since: -34.16% | Next Earnings Date: May 1, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong digital revenue growth, high digital gross margin, and promising AI advancements, alongside strategic cost reduction and asset monetization initiatives. However, there is some concern with the slower growth in adjusted EBITDA.

Highlights

Strong Digital Revenue Growth

Digital subscription revenue grew 46% annually over the last three years, and digital agency revenue grew 33% annually over the same period. In the first quarter, digital subscription revenue grew 40% year over year.

High Digital Gross Margin

Digital revenue has grown more than 17% annually since FY21, translating to 13% annual growth in digital gross margin, with a digital margin of 70%.

AI-Driven Advancements

Significant advances in AI-driven personalization for readers and AI business technology for advertisers, with promising early test results showing 85% adoption rates among engaged users.

Cost Reduction Initiatives

Identified $40 million in annual cost reductions to be executed by the end of the second quarter.

Asset Monetization for Liquidity

Closed over $5 million of asset sales in Q1, with an additional $25 million of non-core assets identified for monetization in 2025.

Lowlights

Challenges with EBITDA Growth

Adjusted EBITDA is expected to grow in the low single digits, indicating slower growth compared to digital revenue.

Company Guidance

During the Lee Enterprises 2025 First Quarter Webcast and Conference Call, the company provided several key metrics and guidance for future growth. Lee reported a total digital revenue of $302 million on a trailing twelve-month basis, with a 5% year-over-year increase in the first quarter. Digital subscription revenue saw a significant 40% rise year-over-year, contributing to a 14% growth in both digital subscription and Amplified Digital revenue. The company's digital gross margin stands at an impressive 70%, reflecting the profitability of its digital ventures. Lee's fiscal year 2025 outlook anticipates a total digital revenue growth of 7% to 10%, supported by AI initiatives like the AI Boost program and targeted cost reductions of $40 million by the end of the second quarter. Additionally, Lee aims to achieve total digital revenue exceeding $450 million by 2028, driven by digital subscription growth, Amplify Digital Agency revenue, and new AI revenue streams.

Lee Enterprises Corporate Events

Business Operations and StrategyFinancial Disclosures

Lee Enterprises Reports Growth in Digital Revenue

Positive

Feb 7, 2025

On February 6, 2025, Lee Enterprises reported its preliminary first quarter fiscal 2025 results, highlighting a 5% year-over-year increase in total digital revenue, which now represents 51% of the company’s total revenue. Digital-only subscription revenue saw a 14% rise, while Amplified Digital Agency revenue grew 14% to $24 million. The company continues its digital transformation, notably through a new strategic partnership with Amazon Web Services to enhance content delivery and customer engagement. Lee Enterprises also identified $40 million in cost reductions to be executed by the end of the second quarter, aiming for digital revenue growth between 7% and 10% for the fiscal year.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.