Download PDF

1. Company Snapshot

1.a. Company Description

Lee 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.

Show Full description

1.b. Last Insights on LEE

Lee Enterprises' recent performance was negatively impacted by a Q2 loss of $2.07 per share, exceeding the Zacks Consensus Estimate of a loss of $0.58. The company's revenue fell short of expectations, indicating a decline in subscription and advertising sales. Additionally, the company's bid price deficiency, as notified by Nasdaq, poses a threat to its continued listing on the exchange. Furthermore, the departure of key executives and the appointment of a new Chief Operating Officer may signal internal restructuring efforts, potentially disrupting the company's operations.

1.c. Company Highlights

2. Lee Enterprises: Digital Transformation on Track, but Earnings Miss

Lee Enterprises reported a mixed third quarter, with adjusted EBITDA growth driven by digital subscription revenue, but missing earnings estimates. Total operating revenue came in at $141 million, in line with the previous quarter, while digital subscription revenue grew 16% year-over-year to $670,000 digitally-only subscribers. However, the company's actual EPS of -$0.31 fell short of estimates at -$0.13.

Publication Date: Aug -16

📋 Highlights
  • Digital Subscription Growth:: Same-store digital revenue grew 16% YoY, driven by 28% ARPU increase, with 670,000 digitally-only subscribers by June.
  • 3-Pillar Strategy Target:: Aims to achieve $450 million in digital revenue by 2028, outpacing industry peers with 33% digital subscription growth over 3 years.
  • Operational Efficiency:: $40 million in annualized cost reductions in Q2 led to 7% cash cost decline YoY, supporting long-term financial sustainability.
  • Quarterly Revenue Stability:: Total Q3 revenue held steady at $141 million, aligning with Q2 trends while digital revenue expanded 16% on pricing improvements.
  • Debt Management:: Progress in paying down debt under favorable Berkshire Hathaway credit terms, prioritizing sustainable growth and local journalism quality.

Digital Growth Strategy on Track

Despite the earnings miss, the company's digital transformation strategy appears to be on track. As stated by Kevin Mowbray, "We've made progress in our digital subscription business, with same-store revenue growth of 16% year-over-year, driven by a 28% growth in ARPU." The company's 3-pillar digital growth strategy is expected to result in $450 million of digital revenue by 2028, driven by its core digital business, which has consistently outpaced industry peers in digital growth.

Cost Savings and Debt Reduction

The company has made significant progress in cost savings, executing approximately $40 million in annualized cost reductions in the second quarter, resulting in a 7% decrease in cash costs compared to the same quarter last year. Additionally, Lee Enterprises remains committed to reducing its debt, with a credit agreement with Berkshire Hathaway providing favorable terms.

Valuation Metrics

Despite the earnings miss, Lee Enterprises' valuation metrics suggest that the company may be undervalued. With a P/S Ratio of 0.05 and an EV/EBITDA of 3.25, the company's stock may be trading at a discount. However, the company's Net Debt / EBITDA ratio of 1.7 and ROIC of -2.95 may be areas of concern for investors.

3. NewsRoom

Card image cap

Lee Enterprises, Incorporated (LEE) Q4 2025 Earnings Call Transcript

Nov -26

Source: seekingalpha.com

Card image cap

Lee Enterprises, Inc. Announces Resignation of Chief Financial Officer Tim Millage

Nov -21

Source: globenewswire.com

Card image cap

Lee Enterprises Announces Intent to Pursue Rights Offering to Potentially Reduce Term Loan Debt Interest Rate to 5% for Five Years

Nov -10

Source: globenewswire.com

Card image cap

WANG & LEE GROUP, INC. Announces Share Combination

Aug -21

Source: globenewswire.com

Card image cap

Lee Enterprises, Incorporated (LEE) Q3 2025 Earnings Call Transcript

Aug -09

Source: seekingalpha.com

Card image cap

Lee Enterprises, Incorporated (LEE) Reports Q3 Loss, Misses Revenue Estimates

Aug -07

Source: zacks.com

Card image cap

WANG & LEE GROUP, Inc. Announces Receipt of Nasdaq Delisting Notifications

Jun -30

Source: globenewswire.com

Card image cap

Nathan Bekke Named Chief Operating Officer

Jun -20

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.79%)

6. Segments

Print Subscription

Expected Growth: 1.83%

Lee Enterprises' 1.83% growth in Print Subscription is driven by strategic acquisitions, expanding digital offerings, and targeted marketing efforts. Additionally, the company's focus on local news and community engagement has helped to retain and attract subscribers. Furthermore, the shift towards subscription-based models has contributed to revenue growth, as consumers increasingly prioritize quality content.

Digital Advertising

Expected Growth: 10.55%

Lee Enterprises' 10.55% growth in Digital Advertising is driven by increasing online presence, strategic partnerships, and targeted marketing efforts. Rising demand for digital media, growing e-commerce, and expanding online user base also contribute to this growth. Additionally, the company's focus on data-driven advertising solutions and investments in digital infrastructure further support this upward trend.

Print Advertising

Expected Growth: 1.83%

Lee Enterprises' 1.83% growth in Print Advertising is driven by increasing demand for local news and information, strategic acquisitions, and cost savings initiatives. Additionally, the company's focus on digital transformation and targeted marketing efforts have contributed to the growth. Furthermore, the company's ability to adapt to changing consumer behavior and preferences has also supported the growth in this segment.

Digital-Only Subscription

Expected Growth: 10.47%

Lee Enterprises' digital-only subscription growth of 10.47% is driven by increasing demand for online news, successful implementation of subscription-based models, and strategic partnerships. Additionally, the company's focus on digital transformation, investment in user experience, and targeted marketing efforts have contributed to the growth.

Print Other

Expected Growth: 2.8%

Lee Enterprises' 2.8% growth in Print Other segment is driven by increasing demand for specialty publications, expansion into new markets, and strategic partnerships. Additionally, the company's focus on digital integration and targeted marketing efforts have contributed to revenue growth.

Digital Other

Expected Growth: 27.8%

Lee Enterprises' Digital Other segment growth of 27.8% is driven by increasing online advertising revenue, expansion of digital marketing services, and growing demand for digital subscriptions. Additionally, strategic acquisitions and investments in digital platforms have contributed to the segment's rapid growth.

7. Detailed Products

Newspaper Publishing

Lee Enterprises publishes 46 daily newspapers and hundreds of weekly, classified, and specialty publications across the United States.

Digital Marketing Services

Lee Enterprises offers a range of digital marketing services, including website design, search engine optimization, and social media management.

Commercial Printing

Lee Enterprises provides commercial printing services, including offset printing, digital printing, and mailroom services.

Online Advertising

Lee Enterprises offers targeted online advertising solutions, including display ads, video ads, and native ads.

Event Hosting

Lee Enterprises hosts and sponsors various events, including concerts, festivals, and community events.

8. Lee Enterprises, Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Lee Enterprises, Incorporated has a moderate threat of substitutes due to the availability of alternative sources of news and information, such as online news websites and social media platforms.

Bargaining Power Of Customers

Lee Enterprises, Incorporated has a low bargaining power of customers due to its diversified customer base and lack of concentration of customers.

Bargaining Power Of Suppliers

Lee Enterprises, Incorporated has a moderate bargaining power of suppliers due to the presence of multiple suppliers of newsprint, ink, and other raw materials.

Threat Of New Entrants

Lee Enterprises, Incorporated has a low threat of new entrants due to the high barriers to entry in the newspaper publishing industry, including the need for significant capital investment and established distribution networks.

Intensity Of Rivalry

Lee Enterprises, Incorporated operates in a highly competitive industry with many established players, leading to a high intensity of rivalry among competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 95.93%
Debt Cost 9.35%
Equity Weight 4.07%
Equity Cost 10.06%
WACC 9.38%
Leverage 2354.41%

11. Quality Control: Lee Enterprises, Incorporated passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
John Wiley & Sons

A-Score: 4.9/10

Value: 5.2

Growth: 2.9

Quality: 5.6

Yield: 7.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

View Full Report
Stock-Card
Scholastic

A-Score: 4.9/10

Value: 7.3

Growth: 4.2

Quality: 3.7

Yield: 5.0

Momentum: 6.0

Volatility: 3.3

1-Year Total Return ->

View Full Report
Stock-Card
Globalstar

A-Score: 4.3/10

Value: 3.1

Growth: 7.3

Quality: 3.4

Yield: 0.0

Momentum: 10.0

Volatility: 2.0

1-Year Total Return ->

View Full Report
Stock-Card
Gannett Co

A-Score: 3.5/10

Value: 7.4

Growth: 3.6

Quality: 4.2

Yield: 0.0

Momentum: 3.0

Volatility: 2.7

1-Year Total Return ->

View Full Report
Stock-Card
EDC

A-Score: 3.3/10

Value: 9.6

Growth: 2.7

Quality: 4.1

Yield: 1.0

Momentum: 1.0

Volatility: 1.3

1-Year Total Return ->

View Full Report
Stock-Card
Lee Enterprises

A-Score: 2.9/10

Value: 10.0

Growth: 0.9

Quality: 5.1

Yield: 0.0

Momentum: 0.0

Volatility: 1.7

1-Year Total Return ->

View Full Report

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.95$

Current Price

3.95$

Potential

-0.00%

Expected Cash-Flows