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Lee Enterprises (LEE)
:LEE

Lee Enterprises (LEE) AI Stock Analysis

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Lee Enterprises

(NASDAQ:LEE)

Rating:36Underperform
Price Target:
$7.00
▲(6.06%Upside)
Lee Enterprises' overall score reflects a challenging financial position with declining profitability and high leverage. The stock's technical indicators suggest bearish momentum. Valuation metrics, marked by a negative P/E ratio, further weigh on the score. Despite some positives from digital growth and strategic cost reductions, the impact of the recent cyber incident and ongoing cash flow issues keep the score low.

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

Lee Enterprises Business Overview & Revenue Model

Company DescriptionLee Enterprises, Incorporated provides local news and information, and advertising services in the United States. The company offers print and digital editions of daily, weekly, and monthly newspapers and publications; and web hosting and content management services. It also provides advertising and marketing services, such as audience extension, search engine optimization, search engine marketing, web and mobile production, social media services, and reputation monitoring and management. In addition, the company offers integrated digital publishing and content management solutions for creating, distributing, and monetizing multimedia content for media publications, universities, television stations, and niche publications. Further, it provides commercial printing services; distributes third party publications; and operates a digital marketing agency. The company was founded in 1890 and is based in Davenport, Iowa.
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 Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q2-2025)
|
% Change Since: -18.62%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong digital revenue growth and successful cost reductions. However, the significant impact of the cyber incident resulted in a net loss and challenges with cash flow and debt management. The launch of innovative AI products and support from Berkshire Hathaway are positive steps moving forward, but the incident's financial impact cannot be ignored.
Q2-2025 Updates
Positive Updates
Digital Revenue Growth
Total digital revenue grew by 4% year-over-year on a same-store basis. Digital subscription revenue continued to lead with a 20% year-over-year growth.
Innovative AI Product Launch
Launched a suite of AI products, including A.I. Enablement, aimed at providing local businesses with advanced tools for thriving in a competitive environment.
Cost Reduction and Efficiency
Executed approximately $40 million in annualized cost reductions in the second quarter, aimed at driving margin growth and lowering costs, particularly in print.
Asset Monetization
Closed over $6 million in asset sales year-to-date, with an additional $25 million to monetize, which will improve liquidity and facilitate debt repayment.
Support from Berkshire Hathaway
Berkshire Hathaway waived interest and basic rent payments for March, April, and May to provide short-term liquidity after the cyber incident.
Negative Updates
Cyber Incident Impact
A significant cyber event in February caused disruption in operations, impacting advertising revenue and subscription revenue due to limited product availability.
Net Loss and Cash Flow Challenges
Net loss totaled $12 million in the quarter, with minimal free cash flow due to the cyber incident and associated costs.
Debt and Balance Sheet Impact
The cyber incident hampered the ability to build and collect from customers, impacting accounts receivable and payable. The incident temporarily increased the principal debt balance.
Company Guidance
During the Lee Enterprises 2025 Second Quarter Conference Call, key guidance metrics were highlighted, emphasizing the company's digital transformation and recovery from a recent cyber incident. The call disclosed that Lee aims to achieve $450 million in digital revenue by 2028, with current annual digital revenue at $303 million. Over the past three years, digital subscription revenue has grown by 40% annually, while Amplified Digital Agency revenue has increased by 18% annually. In the second quarter, digital revenue grew by 4% year-over-year, with digital subscription revenue rising by 20%. The company also introduced AI-empowered products to bolster local businesses' competitiveness. Despite a net loss of $12 million in the quarter, Lee anticipates positive free cash flow in the second half of fiscal year 2025, facilitated by $40 million in annualized cost reductions and non-core asset sales.

Lee Enterprises Financial Statement Overview

Summary
Lee Enterprises is facing significant financial challenges with declining revenue, profitability, and cash flow metrics. The balance sheet shows high leverage and negative equity, posing substantial financial risks that need addressing for future stability.
Income Statement
30
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
20
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
25
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.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
600.26M611.38M691.14M780.97M794.65M618.00M
Gross Profit
454.45M594.57M665.79M750.87M764.87M593.76M
EBIT
3.91M4.55M37.17M73.97M56.56M50.28M
EBITDA
22.32M37.66M69.01M105.55M97.75M95.16M
Net Income Common Stockholders
-43.28M-25.84M-5.27M899.00K22.75M-1.26M
Balance SheetCash, Cash Equivalents and Short-Term Investments
16.11M9.60M14.55M16.18M26.11M33.73M
Total Assets
684.81M649.17M711.62M744.04M843.55M864.06M
Total Debt
493.87M483.85M500.08M516.42M548.91M609.24M
Net Debt
477.76M474.25M485.53M500.23M522.80M575.51M
Total Liabilities
674.39M656.50M687.91M726.80M786.85M893.69M
Stockholders Equity
7.91M-9.89M21.24M15.01M54.56M-31.56M
Cash FlowFree Cash Flow
-16.03M-8.09M-7.63M-4.11M42.60M41.77M
Operating Cash Flow
-6.30M1.12M-2.52M3.43M50.08M49.87M
Investing Cash Flow
5.50M3.73M7.98M6.34M-2.28M-118.18M
Financing Cash Flow
-8.44M-9.80M-7.09M-20.27M-55.42M93.39M

Lee Enterprises Technical Analysis

Technical Analysis Sentiment
Negative
Last Price6.60
Price Trends
50DMA
8.35
Negative
100DMA
9.73
Negative
200DMA
11.46
Negative
Market Momentum
MACD
-0.51
Negative
RSI
41.60
Neutral
STOCH
40.50
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 6.6 is below the 20-day moving average (MA) of 7.18, below the 50-day MA of 8.35, and below the 200-day MA of 11.46, indicating a bearish trend. The MACD of -0.51 indicates Negative momentum. The RSI at 41.60 is Neutral, neither overbought nor oversold. The STOCH value of 40.50 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 17 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 1 New Risks
1.
Q4, 2024

Lee Enterprises Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
NYNYT
80
Outperform
$9.29B31.0816.68%1.00%6.85%21.26%
SSSSP
66
Neutral
$195.59M2.4211.23%6.28%
61
Neutral
$14.27B5.87-4.20%3.70%2.75%-35.76%
GCGCI
56
Neutral
$505.20M11.3126.63%-7.04%
CCCCG
49
Neutral
$68.17M-16.65%105.31%95.66%
47
Neutral
$23.12M0.78160.90%3.60%-8.98%
LELEE
36
Underperform
$41.05M0.00%-7.29%-258.59%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LEE
Lee Enterprises
6.91
-5.39
-43.82%
DALN
DallasNews
4.32
0.37
9.37%
SSP
E. W. Scripps Company Class A
2.35
-0.44
-15.77%
NYT
New York Times
56.05
6.04
12.08%
GCI
Gannett
3.49
-0.56
-13.83%
CCG
Cheche Group
0.81
-0.19
-19.00%

Lee Enterprises Corporate Events

Business Operations and StrategyFinancial Disclosures
Lee Enterprises Reports Q2 2025 Revenue Growth
Positive
May 9, 2025

Lee Enterprises reported its second quarter fiscal 2025 results, highlighting a 20% year-over-year increase in digital-only subscription revenue and a 9% increase in revenue from its Amplified Digital® Agency. Despite a cyber security incident in February that incurred $2 million in restoration costs and impacted advertising revenue, the company has recovered and launched an AI solution to support local businesses. Cost reduction measures were implemented, resulting in $40 million in annualized savings, and the company anticipates improved financial performance in the latter half of fiscal year 2025.

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.