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TEGNA Inc. (TGNA) Q2 Earnings: A Disappointment in Store?

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TV broadcasting station operator, TEGNA Inc. (TGNA - Free Report) is scheduled to report second-quarter 2017 financial numbers on Aug 1, before market opens.

Last quarter, TEGNA’s bottom line matched the Zacks Consensus Estimate.Moreover, earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average beat of 6.56%.

Let’s see how things are shaping up for this announcement.

Factors at Play                                                                                 

The price performance of TEGNA has been depressing over the last six months. The stock lost 32.9%, whereas the industry gained 12% over the same time frame.

The U.S. broadcast TV industry has long been grappling with declining advertising revenues and global economic volatility.  In addition, the broadcast TV industry is categorized as an intensely competitive one. TEGNA’s major competitors include CBS Corp. (CBS - Free Report) , Gray Television Inc. (GTN - Free Report) and Entercom Communications Corp. (ETM). Also, TEGNA’s consistent loss in digital business might hurt its long-term operations.

The media and entertainment industry is one of the rapidly changing areas in the economy. Massive technical changes in content creation, aggregation, and distribution platforms have rendered the traditional business model unprofitable. Such technological changes and their latest upgrades add to the company’s programming costs and expenses, which are likely to affect the bottom line.

On the other hand, TEGNA recently sold its 40.5% stake in web portal, CareerBuilder, to an investor group led by Apollo Global Management and Ontario Teachers’ Pension Plan Board. The company expects to collect almost $250 million from this sale, which will be used to clear off existing debt. TEGNA also completed the spinoff of its auto-sales website, Cars.com, into two publicly traded companies – TEGNA and Cars.com. The decision is likely to generate more value for investors than the current stock price of the company. Both broadcast TV and digital platforms are rapidly evaluating.

Earnings Whispers          

Our proven model does not conclusively show that TEGNA is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: TEGNA has an Earnings ESP of -10%. This is because the Most Accurate estimate stands at 27 cents, lower than the Zacks Consensus Estimate of 30 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: TEGNA has a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 (Sell) or 5 going into the earnings announcement, especially when the company is seeing negative estimate revisions.

TEGNA Inc. Price and EPS Surprise

 

TEGNA Inc. Price and EPS Surprise | TEGNA Inc. Quote

Key Pick

Time Warner Inc. (TWX - Free Report) from the broader industry has the right combination of elements to post an earnings beat when it expectedly reports second-quarter 2017 results on Aug 2. The company has an Earnings ESP of +4.24 % and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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