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TEGNA (TGNA) Down 17.2% Since Earnings Report: Can It Rebound?

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It has been more than a month since the last earnings report for TEGNA Inc. (TGNA - Free Report) . Shares have lost about 17.2% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 Q2

TEGNA reported impressive financial results in the second quarter of 2017, wherein both the bottom and top line beat the Zacks Consensus Estimate.

Net Income

Net income from continuing operations was $49.27 million or $0.23  per share compared with $66.99 million or $0.31 in the prior-year quarter. The company reported adjusted earnings of $0.29 per share, which surpassed the Zacks Consensus Estimate of $0.27. The bottom line fell 42% on a year-over-year basis.

Revenue

Total revenue in the reported quarter was $489.37 millionoutperforming the Zacks Consensus Estimate of $488 million.

As a result of the spin-off of Cars.com spin-off and sale of its web portal CareerBuilder  (reducing its previous 53% controlling interest to 12.5%, on a fully diluted basis), it has reclassified the historical financial results of the Digital Segment (results from Cars.com and CareerBuilder) to Discontinued Operations. In the second quarter, TEGNA’s Digital Marketing Solutions business (known as G/O Digital) was realigned and reported together with the media business.

Discontinued digital marketing services revenues came in at $6.172 million compared to $13.751 million at the end of Jun 30, 2016.  Media revenues came in at $483.20 million versus $460.52 at the end of Jun 30, 2016.

Operating Metrics

In the quarter under review, operating expenses were $339.29 million, up 6.9% year over year. Operating income was $150.08 million, down 6% year over year. Quarterly adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $171.49 million compared with $190.57 million in the year-ago quarter.

Cash Flow

In the second quarter of 2017, TEGNA generated $98.4 million of cash from operations compared with $102.18 million in the prior-year quarter. Free cash flow in the reported quarter was $66.67 million compared with $78.58 million in the year-ago period.

Liquidity

TEGNA’s long-term debt outstanding was $3.3 billion and total cash was $65.7 million at the end of the second quarter of 2017. Dividends paid in the quarter totaled $30.1 million.

Third Quarter 2017 Guidance

Total company revenue is expected to decline in the third quarter of 2017 compared to the year-ago quarter. This is due to the absence of record Olympic revenue in 2016 and substantially lower political advertising than a year ago, as well as the conclusion of a transition services agreement for several digital marketing services and the absence of revenue from the sale of Cofactor last year.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

TEGNA Inc. Price and Consensus

 

TEGNA Inc. Price and Consensus | TEGNA Inc. Quote

VGM Scores

At this time, TEGNA's stock has a poor Growth Score of F, though it is doing a lot better on the momentum front with A.The stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stocks 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.

The company's stock is suitable for value and momentum based on our styles scores.

Outlook

The stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.




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