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Is Townsquare Media a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Townsquare Media, Inc. (TSQ - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Townsquare Media has a trailing twelve months PE ratio of 14.09, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 20.4. If we focus on the long-term PE trend, Townsquare Media’s current PE level puts it above its midpoint over the past two years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Broadcasting-Radio/TV industry’s trailing twelve months PE ratio, which stands at 23.8. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Townsquare Media has a forward PE ratio (price relative to this year’s earnings) of just 9.69, so it is fair to say that a slightly more value-oriented path may be ahead for Townsquare Media stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Townsquare Media has a P/S ratio of about 0.4. This is lower than the S&P 500 average, which comes in at 3.1 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past two years.
If anything, TSQ is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Townsquare Media currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Townsquare Media a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Townsquare Media is just 0.81, a level that is far lower than the industry average of 2.76. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, TSQ is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Townsquare Media might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives TSQ a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have not been favorable. Both the current quarter and current year have seen no estimates going higher in the past sixty days compared to one lower.
This has had an adverse impact on the consensus estimate as the current quarter consensus estimate has fallen by 7.7% in the past two months, while the full year estimate has inched lower by 2.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Notably, the stock has a long term expected earnings growth of 25.9% and sports a Zacks Rank #3 (Hold). These mixed expectations indicate that while the stock’s growth story might be good over the long term, analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Townsquare Media is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a top industry rank (top 37%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Broadcasting-Radio/TV industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Townsquare Media a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Townsquare Media, Inc. (TSQ - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Townsquare Media has a trailing twelve months PE ratio of 14.09, as you can see in the chart below:
Further, the stock’s PE also compares favorably with the Zacks classified Broadcasting-Radio/TV industry’s trailing twelve months PE ratio, which stands at 23.8. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Townsquare Media has a forward PE ratio (price relative to this year’s earnings) of just 9.69, so it is fair to say that a slightly more value-oriented path may be ahead for Townsquare Media stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Townsquare Media has a P/S ratio of about 0.4. This is lower than the S&P 500 average, which comes in at 3.1 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past two years.
If anything, TSQ is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Townsquare Media currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Townsquare Media a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Townsquare Media is just 0.81, a level that is far lower than the industry average of 2.76. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Clearly, TSQ is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Townsquare Media might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives TSQ a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have not been favorable. Both the current quarter and current year have seen no estimates going higher in the past sixty days compared to one lower.
This has had an adverse impact on the consensus estimate as the current quarter consensus estimate has fallen by 7.7% in the past two months, while the full year estimate has inched lower by 2.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Townsquare Media, Inc. Price
Townsquare Media, Inc. Price | Townsquare Media, Inc. Quote
Notably, the stock has a long term expected earnings growth of 25.9% and sports a Zacks Rank #3 (Hold). These mixed expectations indicate that while the stock’s growth story might be good over the long term, analysts have some apprehensions about the stock in the immediate future. Thus, we are looking for in-line performance from the company in the near term.
Bottom Line
Townsquare Media is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a top industry rank (top 37%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Broadcasting-Radio/TV industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>