Broadcasting and digital media company TEGNA (NYSE:TGNA) missed analysts' expectations in Q1 CY2024, with revenue down 3.5% year on year to $714.3 million. It made a non-GAAP profit of $0.45 per share, down from its profit of $0.46 per share in the same quarter last year.
Is now the time to buy TEGNA? Find out by reading the original article on StockStory, it's free.
TEGNA (TGNA) Q1 CY2024 Highlights:
- Revenue: $714.3 million vs analyst estimates of $718.9 million (small miss)
- EPS (non-GAAP): $0.45 vs analyst estimates of $0.44 (3.2% beat)
- Gross Margin (GAAP): 39.7%, down from 42.3% in the same quarter last year
- Market Capitalization: $2.58 billion
Spun out of Gannett in 2015, TEGNA (NYSE:TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.
BroadcastingBroadcasting companies have been facing secular headwinds in the form of consumers abandoning traditional television and radio in favor of streaming services. As a result, many broadcasting companies have evolved by forming distribution agreements with major streaming platforms so they can get in on part of the action, but will these subscription revenues be as high quality and high margin as their legacy revenues? Only time will tell which of these broadcasters will survive the sea changes of technological advancement and fragmenting consumer attention.
Sales GrowthA company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. TEGNA's annualized revenue growth rate of 5.4% over the last five years was weak for a consumer discretionary business. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. TEGNA's recent history shows a reversal from its already weak five-year trend as its revenue has shown annualized declines of 2.6% over the last two years.
We can better understand the company's revenue dynamics by analyzing its most important segments, Subscription and Advertising, which are 52.5% and 41.8% of revenue. Over the last two years, TEGNA's Subscription revenue (access to content) was flat while its Advertising revenue (marketing services) averaged 6.2% year-on-year declines.
This quarter, TEGNA missed Wall Street's estimates and reported a rather uninspiring 3.5% year-on-year revenue decline, generating $714.3 million of revenue. Looking ahead, Wall Street expects sales to grow 12.4% over the next 12 months, an acceleration from this quarter.
Operating MarginOperating margin is a key measure of profitability. Think of it as net income–the bottom line–excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
TEGNA has been a well-oiled machine over the last two years. It's demonstrated elite profitability for a consumer discretionary business, boasting an average operating margin of 27%. This quarter, TEGNA generated an operating profit margin of 19.3%, down 4.2 percentage points year on year.
Over the next 12 months, Wall Street expects TEGNA to become more profitable. Analysts are expecting the company’s LTM operating margin of 24.2% to rise to 27.8%.Key Takeaways from TEGNA's Q1 ResultsIt was encouraging to see TEGNA slightly top analysts' EPS expectations this quarter. On the other hand, its Advertising revenue unfortunately missed and its operating margin fell short of Wall Street's estimates. Overall, the results could have been better. The stock is flat after reporting and currently trades at $14.65 per share.