Shares of magazine and newspaper publisher Washington Post Co. jumped Monday after an article in Barron's dubbed it "America's most undervalued media company."
Barron's, a financial magazine that is part of News Corp.'s The Wall Street Journal family, said Washington Post investors don't give the company credit for its Kaplan education division.
Kaplan runs preparation courses and tutoring programs for students at all levels. It also offers online and campus-based university-level courses and continuing education for finance industry professionals, among other programs.
In an article titled "Washington Post is Dirt Cheap," Barron's wrote that the Post's market value, $4.2 billion, is too low based on the magazine's estimates for the value of each part of the media company's business. Barron's said the Post should be worth about $8.5 billion — including $5 billion from Kaplan — with shares trading at more than $900.
"Largely because of Kaplan, the Post has avoided some of the trials experienced by newspaper publishers like the New York Times, McClatchy and Gannett," which have resorted to layoffs and other cuts as advertising revenue has declined in recent years.
Because Wall Street likes focused companies, Barron's wrote, the Post could boost its share price by spinning off Kaplan, a move Washington Post management has rejected in the past.
Even without selling Kaplan, the Post's stock is too low, Barron's said. Holding on to Kaplan may mean the Post comes to be seen as an education company, which would bring a higher stock valuation.
Investors responded by sending Washington Post's shares up $38.64, or 8.7 percent, to $483.38 in afternoon trading. The stock has ranged from $325.17 to $495.60 over the past year.
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