Broadcasting and digital media company TEGNA (NYSE:TGNA) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 19.9% year on year to $870.5 million. On the other hand, next quarter’s revenue guidance of $675 million was less impressive, coming in 0.9% below analysts’ estimates. Its non-GAAP profit of $1.21 per share was 2.4% above analysts’ consensus estimates.
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TEGNA (TGNA) Q4 CY2024 Highlights:
- Revenue: $870.5 million vs analyst estimates of $871 million (19.9% year-on-year growth, in line)
- Adjusted EPS: $1.21 vs analyst estimates of $1.18 (2.4% beat)
- Adjusted EBITDA: $312.1 million vs analyst estimates of $313.2 million (35.8% margin, in line)
- Revenue Guidance for Q1 CY2025 is $675 million at the midpoint, below analyst estimates of $681.1 million
- Operating Margin: 31.6%, up from 19.8% in the same quarter last year
- Free Cash Flow Margin: 26.8%, up from 21.1% in the same quarter last year
- Market Capitalization: $2.68 billion
“As TEGNA enters its next chapter, we are reinventing how we create and monetize content to capture the full opportunity in both linear TV and digital,” said Mike Steib, CEO.
Company Overview
Spun out of Gannett in 2015, TEGNA (NYSE:TGNA) is a media company operating a network of television stations and digital platforms, focusing on local news and community content.
Broadcasting
Broadcasting companies have been facing secular headwinds in the form of consumers abandoning traditional television and radio in favor of streaming services. As a result, many broadcasting companies have evolved by forming distribution agreements with major streaming platforms so they can get in on part of the action, but will these subscription revenues be as high quality and high margin as their legacy revenues? Only time will tell which of these broadcasters will survive the sea changes of technological advancement and fragmenting consumer attention.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, TEGNA’s 6.2% annualized revenue growth over the last five years was sluggish. This fell short of our benchmark for the consumer discretionary sector and is a rough starting point for our analysis.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. TEGNA’s history shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.7% annually. 
TEGNA also breaks out the revenue for its most important segments, Subscription and Advertising, which are 41% and 36.1% of revenue. Over the last two years, TEGNA’s Subscription revenue (access to content) averaged 2.3% year-on-year declines while its Advertising revenue (marketing services) averaged 5% declines.
This quarter, TEGNA’s year-on-year revenue growth was 19.9%, and its $870.5 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 5.5% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 10.7% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
TEGNA has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 19.4% over the last two years, quite impressive for a consumer discretionary business.
TEGNA’s free cash flow clocked in at $233.6 million in Q4, equivalent to a 26.8% margin. This result was good as its margin was 5.8 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends are more important.
Over the next year, analysts predict TEGNA’s cash conversion will fall. Their consensus estimates imply its free cash flow margin of 20.4% for the last 12 months will decrease to 10.9%.
Key Takeaways from TEGNA’s Q4 Results
Revenue was in line and EPS beat, making for a decent quarter. On the other hand, revenue guidance for the next quarter fell short of Wall Street's expectations. Overall, this was a mixed quarter. The stock traded up 2.3% to $16.99 immediately following the results.
Is TEGNA an attractive investment opportunity at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.