TEGNA (TGNA): Buy, Sell, or Hold Post Q4 Earnings?

Since October 2024, TEGNA has been in a holding pattern, floating around $16.22. However, the stock is beating the S&P 500’s 5.3% decline during that period.

Is there a buying opportunity in TEGNA, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.

Even with the strong relative performance, we're sitting this one out for now. Here are three reasons why there are better opportunities than TGNA and a stock we'd rather own.

Why Is TEGNA Not Exciting?

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.

1. Long-Term Revenue Growth Disappoints

Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Unfortunately, TEGNA’s 6.2% annualized revenue growth over the last five years was sluggish. This was below our standard for the consumer discretionary sector.

2. Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect TEGNA’s revenue to drop by 10.9%, a decrease from its 2.7% annualized declines for the past two years. This projection is underwhelming and implies its products and services will face some demand challenges.

3. Cash Flow Margin Set to Decline

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.

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 11%.

Final Judgment

TEGNA isn’t a terrible business, but it doesn’t pass our bar. Following its recent outperformance amid a softer market environment, the stock trades at 8.6× forward price-to-earnings (or $16.22 per share). While this valuation is optically cheap, the potential downside is big given its shaky fundamentals. We're pretty confident there are superior stocks to buy right now. Let us point you toward a safe-and-steady industrials business benefiting from an upgrade cycle.

Stocks We Would Buy Instead of TEGNA

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