TORSTAR $7.26 - Toronto symbol TS.B

TORSTAR $7.26 (Toronto symbol TS.B; Shares outstanding: 79.7 million; Market cap: $578.6 million; TSINetwork Rating: Above Average; Dividend yield: 7.2%; www.torstar.com) reports that its revenue fell 4.1% in 2012, to $1.49 billion from $1.55 billion in 2011. Before onetime items, earnings per share fell 25.0%, to $1.35 from $1.80.

Torstar continues to struggle with falling newspaper ad sales. Strong competition and unfavourable foreign exchange rates are also hurting profits at Harlequin Enterprises, the world’s leading romance novel publisher.

To improve its profitability, Torstar continues to cut jobs and sell surplus real estate. The company also plans to start charging users to access its websites.

Together, these moves should stabilize the company’s 2013 earnings at $1.35 a share. The stock trades at a low 5.4 times that forecast. These moves should also let the company keep paying quarterly dividends of $0.13125 a share, for a 7.2% annualized yield.

Torstar is still a buy.

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