Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put TEGNA Inc. TGNA stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, TEGNA has a trailing twelve months PE ratio of 11.07, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.37. If we focus on the stock’s long-term PE trend, the current level puts TEGNA’s current PE ratio below its midpoint over the past five years, with the number having risen rapidly over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Broadcasting- Radio/TV industry’s trailing twelve months PE ratio, which stands at 23.83. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that TEGNA has a forward PE ratio (price relative to this year’s earnings) of 14.08. So on the ground of the forward earnings estimates, we might say that the company’s share price is likely to appreciate in the near future.
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, TEGNA has a P/S ratio of about 1.68. This is a bit lower than the S&P 500 average, which comes in at 3.09 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, TGNA is in the higher end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, TEGNA currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes TEGNA a solid choice for value investors.
What About the Stock Overall?
Though TEGNA might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘F’. This gives TGNA a Zacks VGM score—or its overarching fundamental grade—of‘C’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen no estimate going higher in the past sixty days compared to four lower, while the full year estimate has seen two upward and three downward revisions in the same time period.
This has had a significant impact on the consensus estimate as the current quarter consensus estimate has fallen by 19% in the past two months and the full year estimate has inched lower by 1.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat mixed trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
TEGNA is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Moreover, a strong industry rank (Top 37% out of more than 250 industries) further strengthens its growth potential, it is hard to get too excited about this company overall. In fact, over last one year, the Zacks Broadcasting- Radio/TV industry has clearly outperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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TEGNA Inc. (TGNA): Free Stock Analysis Report
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