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TEGNA (TGNA) to Report Q4 Earnings: What's in the Cards?

TEGNA TGNA is slated to report fourth-quarter 2017 results on Mar 1, before the opening bell.

The Zacks Consensus Estimate for revenues is pegged at $488.9 million, reflecting year-over-year decline of 44.9%. The consensus estimate for earnings is pegged at 31 cents per share, indicating year-over-year decline of 58.1%.

The company has a positive earnings surprise history. Earnings outpaced the Zacks Consensus Estimate in three of the previous four quarters, with an average beat of 6.02%.

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

Factors Likely to Influence Q4 Earnings

TEGNA is focused on acquiring lucrative businesses along with making additional investments to increase shareholder’s wealth. Recently, TEGNA completed the acquisition of the broadcasting stations of Midwest Television. The assets will be added to the company’s existing media division. Additionally, TEGNA offers a dynamic portfolio of media and digital businesses in the United States. Currently, the company’s media division owns 47 television stations and two radio stations in 39 markets and is the largest independent television station group of major network affiliates in the top 25 markets. Being more focused on content creation rather than TV broadcasting, the media division shields the company from the prevailing cord-cutting threats in the pay-TV industry.

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Meanwhile, TEGNA has been riding high, following the completion of two strategic business moves. Its plan to use the $250 million of gross proceeds from the sale of its web portal CareerBuilder, to clear off existing debt, looks impressive. Spin-off of its auto-sales website, Cars.com into two publicly traded companies: TEGNA and Cars.com, should increase TEGNA's growth opportunities and market valuation.

We are impressed with TEGNA’s board of directors’ decision to reward stockholders with a dividend of 7 cents per share, which was paid on Jan 2, 2018 to stockholders of record at the closure of business as of Dec 8, 2017.

In the past three months, the stock has returned 6.2% but underperformed the industry’s growth of 21.5%.

 

TEGNA’s operation in a competitive broadcast-TV industry remains a concern. The U.S. broadcast TV industry has long been grappling with declining advertising revenues and global economic volatility. TEGNA’s major competitors are CBS Corp. CBS, Gray Television and Entercom Communications ETM to name a few.

Soft advertising market is also a near-term headwind for the company. Meanwhile, the media and entertainment industry is one of the rapidly-changing industries in terms of technical improvements in content creation, aggregation and distribution platforms. Such upgrades add to the company’s programming costs and expenses, which are likely to affect the bottom line.

Earnings Whispers

Our proven model does not conclusively show that TEGNA is likely to beat the Zacks Consensus Estimate 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. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: TEGNA has an Earnings ESP of -3.28%. This is because the Most Accurate estimate stands at 30 cents per share while the Zacks Consensus Estimate is pegged at 31 cents. You can uncover the best stocks to buy or sell before they’re reported with the Earnings ESP Filter.

Zacks Rank: TEGNA has a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) 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

Stock to Consider

AMC Networks AMCX from the Zacks Consumer Discretionary sector has the right combination of elements to post an earnings beat in fourth-quarter 2017. It will report on Mar 1. The company has an Earnings ESP of +4.80% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters with an average beat of 21.9%.

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CBS Corporation (CBS) : Free Stock Analysis Report
 
Entercom Communications Corporation (ETM) : Free Stock Analysis Report
 
AMC Networks Inc. (AMCX) : Free Stock Analysis Report
 
TEGNA Inc. (TGNA) : Free Stock Analysis Report
 
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