3. Gray Television, Inc. (NYSE:GTN)
Number of Hedge Funds: 22 (2024Q2)
Share Price as of the Close of September 25: $4.95
Gray Television, Inc. (NYSE:GTN) is an American television broadcasting company that owns and operates television stations and digital assets in the US. Its offerings include sports, local news, weather, and entertainment programming across its network of stations.
The company has delivered sound performance in the second quarter, driven both by revenue growth and cost management. The earnings per share were $0.09. Total revenue reached $826 million, a 2% increase from the same quarter of the prior year. Net income also rose significantly from $4 million in Q2, 2023 to $22 million in the present quarter. Even though core advertising revenue was slightly below expectations, political advertising revenue in the second quarter increased 292% from the same period last year to $47 million. Despite a challenging environment, the company’s cost control strategies have led to a stable EBITDA of $225 million. Moreover, the company has also reduced its core and retransmission revenues forecast for the year. Nevertheless, political revenues are expected to continue driving results.
Gray Television, Inc. (NYSE:GTN) has also been making improvements to its balance sheet through efforts such as extending debt maturities. Moreover, the company has been involved in launching new networks, such as Rock Entertainment Sports and Palmetto Sports and Entertainment to enhance its content reach and diversification. The company’s investors will be receiving a payment of $0.08 per share on September 30th. Its dividend yield as of September 24, 2024 is 6.25%.
Miller Value Partners stated the following regarding Gray Television, Inc. (NYSE:GTN) in its Q2 2024 investor letter:
“Our two largest detractors during the quarter were Nabors Industries (NBR) and Gray Television, Inc. (NYSE:GTN), whose share prices were down 17% and 16% respectively during the quarter. We think both company’s share prices are at deep discounts to their long-term fundamental value; we have recently increased both holdings. Gray Television remained under pressure during Q2, with ongoing marketplace concerns on the company debt leverage. Gray has limited maturities over the next 2 years and recently announced an opportunistic debt repurchase program. After a slow start to political advertising due to weaker than expected primaries, we expect to see a nice ramp in political advertising in the back half of the year. Gray’s strong local TV stations, #1 and/or #2 in 89% of their markets, has the company well positioned to achieve $500-700M in high margin political advertising in 2024. In addition, Gray has been outpacing peers in growing their core business over the past couple of years and still appear to be in the early innings of an improvement cycle. Management has recently retrained their salesforce with a greater focus on expanding their high margin digital market share over the next couple of years. In addition, ATSC 3.0 (industry new IP standard), provides opportunity for Gray to stream more content and capture new high margin digital revenue streams overtime. We see the potential for $2.5B of free cash flow generation over the next 5 years that could allow the company to rapidly de-lever their balance sheet and accrue value to the equity holder. With a greater than 80% earnings and free cash flow yield, and an attractive 6.2% dividend yield, we believe patient investors have potential to be rewarded over the coming years”.
At the end of the second quarter, 22 hedge funds held stakes in Gray Television, Inc. (NYSE:GTN), as per IM database, representing a collective worth of $469.77 million.
