Recently I have been looking into a company called Gray Television $GTN, they are a communications company that owns television stations in the United States, approx. 24%.
another few interesting facts I found:
* They are the largest owner of top-rated local TV stations
* Right now they own 94 television stations (they are acquiring 17 more soon)
* Sales mostly come from advertising online and broadcasting as well as a retransmission fee.
Here are their revenues generated by the big 4 networks (being CBS, NBC, ABC, & FOX):
* CBS 36%
* NBC 32%
* ABC 14%
* Fox 10%
* Other 8%
Gray Televisions agreements with these companies expire in late 2023 so they would have to be renewed within that span of time. There are a number of risks though that they do explain in-depth in their 10k.
Most of their revenue at the moment comes from retransmission, the second biggest is Local News Coverage. Net income is also growing. I have done a DCF model on this company and have gotten a fair value of $74.99 per share (using low estimates of future revenue from YF, and using a 1.5% perpetual growth rate) this makes the company SEVERELY undervalued, even with very conservative estimates there is still a 232% upside from the current price ($22.54 at the time of writing)
Metric Industry Average Gray Television
|PB| 4.3 |0.87|
|PS| 3.91 |0.89|
It might also be helpful to know that their Current Ratio is an astounding 5.21! Their Debt/Equity Ratio is also 1.64.
Gray Television definitely has some potential, looking at the metrics alone it is severely undervalued. But that can be a problem, the company owns and operates local television stations, and while the companies financials suggest it is wildly undervalued (even with conservative estimates) it is also likely that the company may only be slightly undervalued considering that there isnt much a future for TV, lets be honest how many of us will be paying cable in the future? I’m betting not many of us. Despite I am still currently Bullish on the company.