TEGNA (TGNA) to Report Q3 Earnings: What’s in the Cards?

TEGNA Inc. TGNA is slated to report third-quarter 2017 results on Nov 8, before the opening bell.

The company displays a positive earnings surprise history. TEGNA beat the Zacks Consensus Estimate in three of the trailing four quarters, with average positive surprise of 7.90%.

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

Factors at Play

TEGNA offers a dynamic portfolio of media and digital businesses in the United States. Currently, the company’s media division owns 46 television stations 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.

TEGNA has been riding high, following the completion of two strategic business moves. The company plans to utilize gross proceeds of $250 million from the sale of its web portal CareerBuilder, to clear off existing debt. The spin-off of its auto-sales website, Cars.com into two publicly traded companies — TEGNA and Cars.com — is anticipated to increase the company’s prospects and appropriate market valuations. Moreover, TEGNA’s media business is faring well, evident from its revenue growth.

We are impressed with TEGNA’s board of directors’ decision to reward stockholders with a dividend of 7 cents per share, payable 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 lost 6.1% compared with the industry’s decline of 12.4%.

However, 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 Inc. and Entercom Communications Corp. 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, this is not the case here as elaborated below.

Zacks ESP: TEGNA has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 23 cents. You can uncover the best stocks to buy or sell before they’re reported with ourEarnings ESP Filter.

Zacks Rank: TEGNA currently carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.

We caution against Sell-rated stocks (Zacks Rank #4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stock to Consider

Here is a company from the broader Consumer Discretionary sector — which houses TEGNA — that has the right combination of elements to post an earnings beat this quarter.

DISH Network Corp DISH is expected to release third-quarter 2017 results on Nov 9. The company has an Earnings ESP of +1.68% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company’s earnings beat the Zacks Consensus Estimate in two of the previous four quarters, with an average beat of 0.76%.

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