TEGNA (TGNA) shares have taken a beating this year, down 9% YTD, a stark contrast to the 2.4% uptick seen in the broader Zacks Consumer Discretionary Sector. The company has found itself trailing its competitors like Netflix (NFLX), Fox (FOXA), and Nexstar Media Group (NXST), who have seen significant share gains.
Central to TGNA’s decline has been its struggles with top-line growth, chiefly from reduced subscription revenues and service disruptions with a distribution partner. Furthermore, sluggish Advertising and Marketing Services (AMS) revenues have also played a pivotal role in hampering its revenue growth.
Despite these challenges, political revenues have shown promise in the first half of 2024. This upswing, coupled with anticipated strong political ad spending and the Summer Olympics, may potentially mitigate the impact of the current economic environment on subscription and ad revenues.
The Premion-Powered Quest for Growth
TEGNA has bet big on Premion, integrating Octillion to bolster its CTV/OTT advertising platform. This strategic move has elevated Premion into new markets to run streaming CTV advertising campaigns, despite national Premion revenues facing headwinds.
The company remains optimistic about the growth prospects of Premion, especially fueled by political advertising revenue and the inclusion of Octillion in its arsenal for future growth.
Riding the Wave of Content Acquisitions
Not resting on its laurels, TEGNA recently inked a Broadcast Rights Agreement with the Dallas Mavericks, expanding its broadcasting reach to over 10 million viewers in Texas. With its footprint covering 39% of all TV households nationwide, TEGNA boasts ownership of the top four network affiliates in the top 25 markets, namely NBC, CBS, ABC, and FOX.
A Downward Spiral in Earnings Projections
While TEGNA has put up a valiant effort, market sentiment tells a different story. Recent earnings estimate revisions for the third quarter and full year of 2024 have seen a downward trend. The dip in earnings projections sheds light on the challenges the company is currently facing.
Deciphering the Investment Conundrum
TEGNA shares, currently undervalued, present an intriguing opportunity for investors. With a Zacks Rank of #3 (Hold), it might be prudent to bide time for a more favorable entry point amidst the current market flux.
