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TEGNA Inc. (TGNA) Down 1.4% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for TEGNA Inc. (TGNA - Free Report) . Shares have lost about 1.4% 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 Beats Earnings and Revenue Estimates in Q4

TEGNA’s fourth-quarter 2021 non-GAAP earnings of 57 cents per share beat the Zacks Consensus Estimate by 3.64% but declined 51% on a year-over-year basis.

Revenues declined 17.4% year over year to $774.6 million and beat the consensus mark by 0.78%. The year-over-year upside was driven by record second-quarter growth in subscription revenues and advertising and marketing services revenues.

Quarter in Detail

Advertising and Marketing Services (51.7% of revenues) revenues increased 13.7% year over year to $400.1 million, demonstrating significant broad-based strength across advertising categories.

Subscription (43.4% of revenues) revenues increased 7.1% year over year to $335.9 million due to rate increases.

Political (3.4% of revenues) revenues were $26.6 million, down 89.9% year over year

Other revenues (1.6% of revenues) were $12 million, up 52.7% year over year.

Non-GAAP adjusted EBITDA decreased 42.8% year over year to $245.3 million. Adjusted EBITDA margin contracted to 31.7% from 45.7% in the year-ago period.

Non-GAAP operating expenses (72.5% of revenues) of $561.4 million were up 3.3% year over year, predominantly driven by investments in growth initiatives such as Premion.

Non-GAAP operating income plunged 45.9% year over year to $213.2 million. Operating margin contracted to 27.5% from 42% in the year-ago period.

Balance Sheet & Cash Flow

As of Dec 31, 2021, total cash was $57 million compared with $51 million as of Sep 30, 2021.

Total debt was $3.3 billion and net leverage was 3.24 times as of Dec 31, 2021.

Free cash flow in the fourth quarter was $189 million, better than $137 million reported in the previous quarter, driven by continued growth in subscription and advertising and marketing services revenues.

Post Quarter Development

On Feb 22, Tegna entered into a definitive agreement to be acquired by an affiliate of Standard General and become a private company.

Per the deal, Tegna will be acquired by Standard General affiliate for $24 per share in cash. The transaction, which was unanimously approved by the Tegna Board, has an equity value of around $5.4 billion and an enterprise value of $8.6 billion, including the assumption of debt. With the acquisition in place, Tegna will become the United States’ largest minority-owned broadcast group.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

The consensus estimate has shifted -6.56% due to these changes.

VGM Scores

Currently, TEGNA Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise TEGNA Inc. has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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