TEGNA TGNA shares find themselves in a troubling spot, down 9% year to date (YTD) while the broader Zacks Consumer Discretionary Sector thrives at 2.4%. The notable underperformance extends to the Zacks Broadcast Radio and Television industry, competing with the likes of Netflix NFLX, Fox FOXA, and Nexstar Media Group NXST.
The unimpressive YTD performance can be traced back to reduced subscription revenues and a hiccup in service with a key partner, suffocating top-line growth. Sluggish Advertising and Marketing Services (AMS) revenues haven’t been helping either, impacting the overall financial health of the company.
Despite these challenges, a silver lining appeared in the form of a rise in political revenues during the first half of 2024. Projections indicate that a surge in political ad spending and the arrival of the Summer Olympics could bring about a much-needed boost to TEGNA’s top-line growth in the third quarter.
On the expense-front, TEGNA has been a model of efficiency, managing to meet its cost-cutting goals. The company foresees maintaining or even slightly reducing operating expenses in the third quarter compared to the previous year, a promising sign for investors.
Given these developments, the burning question is whether the anticipated uptick in political revenues and tight rein on costs will be sufficient to lift TGNA shares from their current slump. Let’s delve deeper into the analysis…
Unpacking TEGNA’s Price Performance and Consensus
TEGNA Inc. price-consensus-chart | TEGNA Inc. Quote
Analyzing Premion’s Impact on TGNA’s Revenue
Premion, TEGNA’s CTV/OTT advertising platform, welcomed Octillion into its fold, bolstering its capabilities and reach in the digital advertising realm. The strategic integration led to impressive growth in local revenues but faced headwinds from national Premion revenues.
TEGNA’s optimism shines through in its belief that political ad spending will drive Premion’s revenue growth this year, with Octillion’s addition poised to provide further momentum in the upcoming years.
Beyond this, recent broadcasting deals, like the New Broadcast Rights Agreement with Dallas Mavericks, are expanding TEGNA’s broadcast footprint significantly. The company’s reach now spans 39% of all TV households in the nation, marking it as the primary independent station owner of the top network affiliates in major metropolitan areas. TEGNA, setting action in stone, has also secured broadcast rights agreements with NBC for several high-profile events.
Forecasting Earnings Trajectory for TGNA
A downward trend permeates the Zacks Consensus Estimate for both the third quarter of 2024 and the full year, painting a cautious outlook.
The Consensus Estimate for third-quarter 2024 earnings stands at 83 cents, marking a 7.8% dip over the past month. Revenues, on the other hand, are projected to see a year-over-year growth of 11.1%, reaching $792.44 million.
For the full year 2024, revenue estimates indicate a 7.33% uptick to $3.12 billion, while earnings are anticipated to hit $3.07 per share, showing a minor 2% adjustment.
TEGNA – A Hold in Turbulent Waters
Despite being undervalued as per the Value Score, TEGNA faces a challenging road ahead due to ongoing struggles with subscription and AMS revenues.
The current Zacks Rank of #3 (Hold) suggests that potential investors might want to bide their time, awaiting a more opportune entry point into TEGNA shares.
Zacks Investment Research offers a glimpse into promising stocks, like the emerging semiconductor giant, poised to tap into the ever-growing demand for cutting-edge technological solutions in today’s fast-evolving landscape.
While uncertainty swirls around TEGNA’s future, a steady hand and a keen eye on market dynamics remain essential for investors navigating the stock’s current woes.
