Local television stations are loving Decision 2012 as political
advertising revenue has sharply increased.
Gray Television, Inc.
(
GTN
) has turned it around from an earnings loss in 2011 to being
profitable in 2012. This Zacks #1 Rank (Strong Buy) remains
extremely cheap, with a forward P/E of just 2.3.
Gray Television operates 36 television stations in 30 markets. The
company, which is headquartered in Atlanta, has 17 channels
affiliated with CBS, 10 channels with NBC, 8 channels with ABC and
1 channel on FOX.
Revenue Surged 16% In Q1
On May 2, Gray Television reported first quarter results of 4 cents
a share. The Zacks Consensus had been looking for zero cents.
Revenue climbed to $80.7 million from $69.7 million in the year ago
quarter. The quarter was boosted by political advertising revenue
which soared 259%, and saw a new first quarter record, to $5
million.
It also saw increases in retransmission advertising, which rose 68%
to $8.5 million and in Internet advertising which gained 34% to
$5.7 million. Internet advertising benefited from an improving
economy.
Outside of political advertising, its 5 largest local and national
advertising categories saw the following increases in the first
quarter compared with a year ago: automotive rose 8%; medical rose
15%; restaurant climbed 8%; communications surge 17% and furniture
and appliances increased 5%.
Outlook For Q2
Revenue is expected to rise again year over year in the second
quarter. Local revenue, excluding political advertising revenue, is
expected to rise between 3% and 4%. National revenue is forecast to
rise about 10% (again, excluding political revenue.)
Including political revenue, it is expected to rise 13%.
Political advertising revenue is expected to increase between 116%
and 137% in the second quarter, or between $5 million and $5.5
million.
Analysts Revise Q2 Estimates Higher
In the last 30 days, 2 estimates out of 4 have been revised higher
for 2012. The Zacks Consensus Estimate has moved to 63 cents, up
from 61 cents in that time.
That is huge earning growth of 3,237% as the company actually lost
2 cents in 2011. That's a big turnaround.
Very Cheap Stock
Shares sold off during the Great Recession and haven't recovered
much since.
But this has created a stock with all of the key value metrics.
In addition to a forward P/E of just 2.3, it also has a
price-to-book of 0.6. A P/B ratio under 3.0 can mean there is
value.
Its price-to-sales ratio is also flashing value. Its P/S ratio of
just 0.2 is well under the 1.0 which can indicate value.
The company has other solid fundamentals as well, including a
1-year return on equity of 11.6%.
Yes, the stock is trading under $5 which I normally try and avoid.
But with several analysts covering the company, I felt there are
enough eyes looking at it.
This political season is injecting much needed cash into local
television stations. Gray Television is one way for investors to
cash in on campaign season.
Tracey Ryniec is the Value Stock Strategist for
Zacks.com
. She is also the Editor of the Turnaround Trader and Insider
Trader services. You can follow her on twitter at
@TraceyRyniec
.
GRAY TELEVSN (GTN): Free Stock Analysis Report
GRAY TELEVSN (GTN): Free Stock Analysis Report
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