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Why Is TEGNA Inc. (TGNA) Down 4.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for TEGNA Inc. (TGNA - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is TEGNA Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

TEGNA Q2 Earnings Beat Estimates, Revenues Rise Y/Y

TEGNA’s second-quarter 2021 non-GAAP earnings of 50 cents per share beat the Zacks Consensus Estimate by 2.04%. The bottom line surged 316.7% on a year-over-year basis.

Revenues increased 26.9% year over year to $732.9 million and beat the consensus mark by 0.33%. This year-over-year growth was driven by record second-quarter growth in subscription revenues and advertising and marketing services revenues.

Quarter in Detail

Advertising and Marketing services (46.5% of revenues) revenues increased 48.8% year over year to $340.9 million.

Subscription (51.2% of revenues) revenues increased 16% year over year to $375.1 million due to rate increases.

Political (1.3% of revenues) revenues were $9.6 million, down 45.4% year over year

Other revenues (1% of revenues) were $7.4 million, down 2.2% year over year.

Non-GAAP adjusted EBITDA increased 83% year over year to $227.7 million. Adjusted EBITDA margin expanded 950 basis points (bps) to 31.1%. Adjusted EBITDA growth reflects strong operational performance of TEGNA’s stations.

Non-GAAP operating expenses (73.2% of revenues) of $536.8 million were up 10.2% year over year, primarily on account of higher programming expenses in relation to an increase in subscription revenues.

Non-GAAP operating income surged 116.8% year over year to $196.1 million. Operating margin expanded to 26.8% from 15.7% in the year-ago period.

Balance Sheet & Cash Flow

As of Jun 30, 2021, total cash was $57 million compared with $13 million as of Mar 31, 2021.

Total debt was $3.5 billion and net leverage was 3.64 times as of Jun 30, 2021.

Free cash flow in the second quarter was $91.9 million, down 4.4% year over year. Free cash flow was offset by approximately $118 million in income tax payments.

Guidance

For the third quarter of 2021, TEGNA expects GAAP revenues to increase in over low-single digit percent. Non-GAAP operating expenses are expected to increase in mid-to-high single digit percent.

For 2021, TEGNA expects net subscription profits to grow in the mid-to-high teens percentage range.

The company expects free cash flow as a percentage of 2020-2021 revenues of 21.5%- 22%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision flatlined during the past month.

VGM Scores

At this time, TEGNA Inc. has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

TEGNA Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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