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Local television broadcasting and media company Gray Television (NYSE:GTN) reported Q4 CY2024 results exceeding the market’s revenue expectations , with sales up 20.9% year on year to $1.05 billion. On the other hand, next quarter’s revenue guidance of $769.5 million was less impressive, coming in 3.7% below analysts’ estimates. Its GAAP profit of $1.59 per share was 25.7% above analysts’ consensus estimates.

Is now the time to buy Gray Television? Find out in our full research report.

Gray Television (GTN) Q4 CY2024 Highlights:

• Revenue: $1.05 billion vs analyst estimates of $1.04 billion (20.9% year-on-year growth, 0.7% beat)

• EPS (GAAP): $1.59 vs analyst estimates of $1.27 (25.7% beat)

• Adjusted EBITDA: $402 million vs analyst estimates of $375.4 million (38.5% margin, 7.1% beat)

• Revenue Guidance for Q1 CY2025 is $769.5 million at the midpoint, below analyst estimates of $799.2 million

• Operating Margin: 31.1%, up from 13.1% in the same quarter last year

• Market Capitalization: $388.1 million

Company Overview

Specializing in local media coverage, Gray Television (NYSE:GTN) is a broadcast company supplying digital media to various markets in the United States.

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

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Gray Television grew its sales at a 11.4% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

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. Gray Television’s recent history shows its demand slowed as its revenue was flat over the last two years.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Retransmission and Advertising, which are 34.5% and 36.4% of revenue. Over the last two years, Gray Television’s Retransmission (affiliate and licensing fees) and Advertising (marketing services) revenues were flat.

This quarter, Gray Television reported robust year-on-year revenue growth of 20.9%, and its $1.05 billion of revenue topped Wall Street estimates by 0.7%. Company management is currently guiding for a 6.5% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to decline by 11.3% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and suggests 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.

Gray Television has shown weak cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 5.2%, subpar for a consumer discretionary business. The divergence from its good operating margin stems from its capital-intensive business model, which requires Gray Television to make large cash investments in working capital and capital expenditures.

Key Takeaways from Gray Television’s Q4 Results

We enjoyed seeing Gray Television beat analysts’ EPS expectations this quarter. We were also happy its EBITDA outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter missed. Overall, this quarter had some key positives. The stock traded up 2.1% to $3.95 immediately following the results.

So do we think Gray Television is an attractive buy at the current price? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.