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Key Points
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In its first quarter the company posted declines in key metrics, but still beat the consensus analyst estimates.
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The drops were mainly due to declines in political ad revenue and a lower number of company stations airing the Super Bowl.
Convincing beats on both the top and bottom lines for its first quarter propelled Gray Media (NYSE: GTN) stock to a double-digit gain on Thursday. Investors piled into the company following the earnings report and left it with an impressive rise of nearly 19%. That was miles ahead of the S&P 500 index's 0.6% advance.
A double beat in the opening quarter of 2025
The period saw Gray earn total revenue of $782 million. This was 5% down from the year-ago quarter due largely to declines in core ad revenue -- not least because the Super Bowl aired on fewer of its channels -- and the take from political advertising. Nevertheless the top line exceeded both the company's own guidance and the consensus analyst estimate of slightly more than $773 million.
On the bottom line, Gray flipped to a loss of $22 million ($0.23 per share), from first quarter 2024's net profit of $75 million. Again, though, that was better than expected, as the average pundit estimate for net loss was a far steeper $0.43 per share.
Investors seemed cheered not only by the twin beats, but also by the company stressing that it reduced its debt by $17 million during the quarter, and posted the first year-over-year decline in operating expenses since 2020.
Of dividends and guidance
Gray also declared its latest common stock dividend, which is its standard $0.08 per share. This will be paid on June 30 to investors of record as of June 13, and boasts a high yield of 7.4% at the current stock price.
Finally, the company proffered guidance for its current (second) quarter. Core advertising should be down year over year in the mid-single-digit percentage range, while political advertising is assumed to fall to $2 million from the year-ago quarter's $47 million. Other revenue items should remain generally level, as should operating expenses.
Gray deserves some applause for the two beats, and that dividend is appealing, but otherwise its performance isn't overly impressive. I don't see this stock as a compelling buy.
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