Intrinsic Value TEGNA Inc. (TGNA)

• Previous Close: $21.05
• Intrinsic Value: $5.22
• Upside potential: -75%

Stock Valuation Context

Business Model And Market Position

TEGNA Inc. operates as a media company primarily focused on local broadcasting and digital content distribution. The company owns and operates 64 television stations across 51 U.S. markets, making it one of the largest independent station groups. Its core revenue model is driven by advertising sales, retransmission fees from cable and satellite providers, and digital streaming services. TEGNA’s stations are affiliated with major networks like NBC, CBS, and ABC, ensuring broad audience reach. The company has strategically expanded into digital platforms, including Premion for OTT advertising and Tegna Marketing Solutions for localized ad campaigns. This diversification helps mitigate cyclical advertising risks while capitalizing on the shift toward digital consumption. TEGNA’s market position is strengthened by its focus on high-growth markets and investments in investigative journalism, which enhances viewer loyalty and ad pricing power. The company competes with other broadcasters, digital media firms, and streaming services, but its local news dominance and hybrid revenue streams provide a competitive edge.

Revenue Profitability And Efficiency

TEGNA reported revenue of $3.1 billion for FY 2024, with net income of $599.8 million, reflecting a robust margin of approximately 19.3%. Diluted EPS stood at $3.53, demonstrating strong earnings power. Operating cash flow was $685 million, while capital expenditures were modest at $52.4 million, indicating efficient capital deployment. The company’s profitability is supported by high-margin retransmission fees and disciplined cost management.

Earnings Power And Capital Efficiency

TEGNA’s earnings are underpinned by stable retransmission revenue and cyclical advertising demand. The company generated $685 million in operating cash flow, with a capital efficiency ratio (OCF/CapEx) of 13.1x, highlighting its ability to fund growth and dividends without excessive reinvestment. Its asset-light model and focus on high-ROIC digital initiatives further enhance capital efficiency.

Balance Sheet And Financial Health

TEGNA’s balance sheet shows $693.2 million in cash and equivalents against $3.14 billion in total debt, resulting in a net debt position of $2.45 billion. The leverage ratio is manageable given stable cash flows, but refinancing risks in a rising-rate environment warrant monitoring. The company’s liquidity position remains adequate, with no near-term debt maturities reported.

Growth Trends And Dividend Policy

TEGNA’s growth is driven by digital ad expansion and retransmission fee escalations, though traditional ad revenue remains cyclical. The company pays a modest dividend of $0.50 per share, yielding ~1.5%, reflecting a balanced approach to shareholder returns and reinvestment. Share buybacks or dividend hikes could be prioritized if debt reduction targets are met.

Valuation And Market Expectations

At a P/E of ~9x based on FY 2024 EPS, TEGNA trades at a discount to media peers, likely reflecting concerns over cord-cutting and ad volatility. However, its digital transition and high free cash flow yield may attract value-oriented investors if execution remains strong.

Strategic Advantages And Outlook

TEGNA’s local news dominance and hybrid revenue model provide resilience against industry disruption. Near-term challenges include ad market softness and regulatory risks, but its digital investments and cost controls position it for steady long-term growth. The outlook hinges on sustaining retransmission growth and scaling high-margin digital services.

Sources

Company 10-K, investor presentations