Gray Television Stock Is Believed To Be Modestly Undervalued
In This Article:
- By GF Value
The stock of Gray Television (NYSE:GTN.A, 30-year Financials) gives every indication of being modestly undervalued, according to GuruFocus Value calculation. GuruFocus Value is GuruFocus' estimate of the fair value at which the stock should be traded. It is calculated based on the historical multiples that the stock has traded at, the past business growth and analyst estimates of future business performance. If the price of a stock is significantly above the GF Value Line, it is overvalued and its future return is likely to be poor. On the other hand, if it is significantly below the GF Value Line, its future return will likely be higher. At its current price of $18 per share and the market cap of $1.9 billion, Gray Television stock shows every sign of being modestly undervalued. GF Value for Gray Television is shown in the chart below.
Because Gray Television is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth, which averaged 27.2% over the past three years and is estimated to grow 6.74% annually over the next three to five years.
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Since investing in companies with low financial strength could result in permanent capital loss, investors must carefully review a company's financial strength before deciding whether to buy shares. Looking at the cash-to-debt ratio and interest coverage can give a good initial perspective on the company's financial strength. Gray Television has a cash-to-debt ratio of 0.19, which ranks worse than 79% of the companies in the industry of Media - Diversified. Based on this, GuruFocus ranks Gray Television's financial strength as 4 out of 10, suggesting poor balance sheet. This is the debt and cash of Gray Television over the past years:
It is less risky to invest in profitable companies, especially those with consistent profitability over long term. A company with high profit margins is usually a safer investment than those with low profit margins. Gray Television has been profitable 10 over the past 10 years. Over the past twelve months, the company had a revenue of $2.4 billion and earnings of $3.74 a share. Its operating margin is 30.37%, which ranks better than 94% of the companies in the industry of Media - Diversified. Overall, the profitability of Gray Television is ranked 8 out of 10, which indicates strong profitability. This is the revenue and net income of Gray Television over the past years: