Television broadcasters are having a terrific 2018, courtesy of strong demand for political advertising in the United States related to mid-term elections. Also, other major events such as FIFA World Cup and 2018 Winter Olympics paved the way for additional demand for advertising slots.
The momentum in ad dollars is expected to continue in 2019 due to major events like European Games, Special Olympics and the U.S. state elections. Moreover, growing demand for virtual multichannel video programming distributor (vMVPD) services or "skinny bundles" is a key catalyst. These services, which are available through the Internet, often contain fewer channels than a traditional subscription, and therefore are cheaper than traditional offerings.
The "skinny bundles" are helping broadcasters keep pace with new consumption patterns and attract customers. The broadcasting companies are also spending more on original and quality content that are lowering their churn rate despite stiff competition from streaming platforms like Netflix and Hulu.
Here we pick five television broadcasters that are expected to outperform the market in 2019. Apart from having strong fundamentals, these stocks either flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) that offer good investment opportunities. You can see the complete list of today's Zacks #1 Rank stocks here.
Greenwich, CT-based Townsquare MediaTSQ is expected to benefit from rapid penetration of the company's digital business in the small and medium business (SMB) segment in the 67 markets it operates. Notably, subscriber base at Townsquare Interactive (TSI), the company's digital marketing solutions business, is expected to increase by almost 3000 in 2019. The company's focus on monetizing Live Events (portfolio includes 200 events) is noteworthy.
This Zacks Rank #1 stock delivered average positive earnings surprise of 9.2% in the trailing four quarters. The Zacks Consensus Estimate for its 2019 earnings has increased 5% to $1.05 over the past 60 days.
Townsquare Media, Inc. Price and Consensus
Santa Monica, CA-based Entravision CommunicationsEVC has a Zacks Rank #2. The company is a popular name among Hispanics (49 Spanish-language radio stations) that enables it to provide Latino data and digital services to advertisers. Its growing digital advertising solutions portfolio is a major growth driver. The company is also expected to benefit from continued higher spending by advertisers on digital audio in 2019.
The company delivered average positive earnings surprise of 50% in the trailing four quarters. The Zacks Consensus Estimate for its 2019 earnings has jumped 122.2% to 20 cents over the past 60 days.
Entravision Communications Corporation Price and Consensus
Atlanta-based Gray TelevisionGTN also has a Zacks Rank #2. The Raycom Media merger is a key catalyst for the company in 2019. Apart from offering television content, the merger will help Gray provide sports marketing, production and digital signage services. Moreover, the combined entity will operate in 92 markets, of which 85 will have rank1/rank 2 stations, per Nielsen ratings.
Gray delivered average positive earnings surprise of 33.4% in the trailing four quarters. The Zacks Consensus Estimate for its 2019 earnings has increased 1.5% to $1.31 over the past 60 days.
Gray Television, Inc. Price and Consensus
Texas-based Nexstar Broadcasting GroupNXST is expected to benefit from its premiere local content programs. Additionally, renewal of distribution agreements with multichannel video programming distributors is likely to boost retransmission and digital revenues in the near term.
Moreover, post the completion of the proposed Tribune Media acquisition deal, Nexstar will become the largest television broadcaster in the United States. The acquisition, expected to complete late in the third quarter of 2019, will add roughly $160 million to Nexstar's earnings in the first year.
This Zacks Rank #2 stock delivered average positive earnings surprise of 5.3% in the trailing four quarters. The Zacks Consensus Estimate for its 2019 earnings has increased 1.3% to $7.19 over the past 60 days.
Nexstar Broadcasting Group, Inc. Price and Consensus
McLean, VA-based TEGNATGNA is expected to benefit from an increase in paid-up subscriber base. The company's deals to acquire two leading stations, WTOL and KWES, in Ohio and Texas are expected to boost its market share. Moreover, expanding OTT partner base is a key catalyst.
The company delivered average positive earnings surprise of 6.1% in the trailing four quarters. The Zacks Consensus Estimate for its 2019 earnings has increased 4.2% to $1.48 over the past 60 days.
TEGNA Inc. Price and Consensus
In addition to the stocks discussed above, would you like to know about our 10 top tickers to buy and hold for the entirety of 2019?
These 10 are painstakingly handpicked from over 4,000 companies covered by the Zacks Rank. They are our primary picks poised to outperform in the year ahead. Be among the first to see the new Zacks Top 10 Stocks >>