Fairfax Media Limited's (ASX: FXJ) share price has gained 65% this calendar year, making it one of the top performing stocks in the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO).
It's obviously a great return and goes to show what can happen when a company which is completely unloved reports results which are better than the market was expecting.
Fairfax hasn't been the only 'old world' newspaper publisher to enjoy a significant re-rating in 2014. APN News and Media Limited (ASX: APN) has also impressed with a return of 53%.
In fact, this calendar year Fairfax and APN have both outperformed the 'new world market darlings' SEEK Limited (ASX: SEK) and REA Group Limited (ASX: REA) with their respective returns of 31% and 21.5%.
In the case of Fairfax, its share price leapt higher in February after reporting a strong turnaround in interim results. Improvements included a balance sheet which went from having $154 million in net debt to $80 million net cash and adjusted profit after tax that jumped from $58.7 million to $86.8 million.
This result equates to earnings per share of 3.7 cents; which annualised places the stock on a price-to-earnings ratio of 14.7. Assuming the company can meet its aim of reigning in costs to below $1.6 billion this year, there's a good chance Fairfax can grows its earnings further which could certainly provide further support for the share price.
