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Broadcast Radio and Television Industry Near-Term Outlook Solid
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The Zacks Broadcast Radio and Television industry comprises companies offering television, radio and digital media services over a variety of platforms. The companies in the industry majorly derive their revenues from the sale of advertising slots.
Demand for the industry participants’ services have been on the rise owing to easy access to content across platforms including mobile phones. Increase in content consumption is driving the companies to produce on-demand and unique content. These factors are expected to attract users thereby boosting ad dollars.
Here are the industry’s three major themes:
To adapt to the ongoing changes in the industry, the companies are increasingly diversifying their business models to include over-the-top (OTT) services in addition to linear TV. This is helping industry participants to lower churn rate. Additionally, with OTT services in place, the companies can easily reach a global audience and expand their international user base. This, in turn, attracts advertisers to their platforms, thereby boosting ad revenues. Moreover, the use of services to help advertisers measure their ROI and enhance their use cases is expected to benefit both advertisers and industry participants. Also, major events such as European Games and the U.S. state elections are likely to aid ad dollars in 2019.
Many industry participants, who are either launching their own OTT services or acquiring other OTT services, are banking on user insights to deliver the right content. Increased digital viewing capabilities is making consumer data easily available to the companies, thereby allowing them to apply analytical techniques to create/procure targeted content. The move not only boosts user engagement but also helps industry participants to price their services higher. With many services available globally, users are bound to choose services that deliver the best value for them. This apart, the industry is witnessing a number of consolidations to keep up with competition and provide quality services.
Increase in cord cutting has forced industry participants to offer alternative services like virtual multichannel video programming distributor (vMVPD) services, also sometimes called “skinny bundles.” These services, which are available through the Internet, often contain fewer channels than a traditional subscription and therefore are cheaper than traditional offerings. The move is in line with changing consumer viewing dynamics as growth in Internet penetration and advances in mobile, video, and wireless technologies have boosted small screen viewing. The alternative services are expected to keep users glued to their platforms, thereby increasing the need to produce more content. This bodes well for industry participants.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Broadcast Radio and Television industry is housed within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #46, which places it in the top 18% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group’s earnings growth potential. Since May 31, 2018, the industry’s earnings estimates for the current year have moved 14.2% upward.
Before we present a few stocks that you may want to consider, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 & Sector
The Zacks Broadcast Radio and Television industry has outperformed both the Zacks S&P 500 composite as well as its own sector in the past year.
The stocks in this industry have collectively rallied 14.2% compared with the S&P 500’s rise of 11.4% and the Zacks Consumer Discretionary sector’s increase of 8.4%.
One Year Price Performance
Industry’s Current Valuation
On the basis of trailing 12-month EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization), which is a commonly used multiple for valuing Broadcast Radio and Television stocks, the industry is currently trading at 24.14X versus the S&P 500’s 11.29X and the sector’s 12.26X.
Over the past five years, the industry has traded as high as 30.45X and as low as 18.10X, recording a median of 24.51X, as the chart below shows.
EV/EBITDA Ratio (TTM)
Bottom Line
The industry participants are expected to benefit from their diversified customer offerings, increased content consumption and Internet penetration and technological advances.
Here we present a few top-ranked stocks from the industry:
AMC Networks Inc. (AMCX - Free Report) : NY-based AMC Networks has returned 10.4% in the past year. The Zacks Consensus Estimate for the company’s current-year EPS has increased 0.5% to $8.56 over the past 30 days. The company sports a Zacks Rank #1 (Strong Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: AMCX
Sinclair Broadcast Group, Inc. (SBGI - Free Report) : MD-based Sinclair Broadcast has returned 63% in the past year. The Zacks Consensus Estimate for the company’s current-year EPS has remained steady at $2.28 over the past 30 days. The company has a Zacks Rank #1.
Price and Consensus: SBGI
Gray Television, Inc. (GTN - Free Report) : Atlanta, GA-based Gray Television has returned 106.4% in the past year. The Zacks Consensus Estimate for the company’s current-year EPS has remained steady at $1.47 over the past 30 days. The company has a Zacks Rank #2 (Buy).
Price and Consensus: GTN
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Broadcast Radio and Television Industry Near-Term Outlook Solid
The Zacks Broadcast Radio and Television industry comprises companies offering television, radio and digital media services over a variety of platforms. The companies in the industry majorly derive their revenues from the sale of advertising slots.
Demand for the industry participants’ services have been on the rise owing to easy access to content across platforms including mobile phones. Increase in content consumption is driving the companies to produce on-demand and unique content. These factors are expected to attract users thereby boosting ad dollars.
Here are the industry’s three major themes:
Zacks Industry Rank Indicates Bright Prospects
The Zacks Broadcast Radio and Television industry is housed within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #46, which places it in the top 18% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group’s earnings growth potential. Since May 31, 2018, the industry’s earnings estimates for the current year have moved 14.2% upward.
Before we present a few stocks that you may want to consider, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Outperforms S&P 500 & Sector
The Zacks Broadcast Radio and Television industry has outperformed both the Zacks S&P 500 composite as well as its own sector in the past year.
The stocks in this industry have collectively rallied 14.2% compared with the S&P 500’s rise of 11.4% and the Zacks Consumer Discretionary sector’s increase of 8.4%.
One Year Price Performance
Industry’s Current Valuation
On the basis of trailing 12-month EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization), which is a commonly used multiple for valuing Broadcast Radio and Television stocks, the industry is currently trading at 24.14X versus the S&P 500’s 11.29X and the sector’s 12.26X.
Over the past five years, the industry has traded as high as 30.45X and as low as 18.10X, recording a median of 24.51X, as the chart below shows.
EV/EBITDA Ratio (TTM)
Bottom Line
The industry participants are expected to benefit from their diversified customer offerings, increased content consumption and Internet penetration and technological advances.
Here we present a few top-ranked stocks from the industry:
AMC Networks Inc. (AMCX - Free Report) : NY-based AMC Networks has returned 10.4% in the past year. The Zacks Consensus Estimate for the company’s current-year EPS has increased 0.5% to $8.56 over the past 30 days. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: AMCX
Sinclair Broadcast Group, Inc. (SBGI - Free Report) : MD-based Sinclair Broadcast has returned 63% in the past year. The Zacks Consensus Estimate for the company’s current-year EPS has remained steady at $2.28 over the past 30 days. The company has a Zacks Rank #1.
Price and Consensus: SBGI
Gray Television, Inc. (GTN - Free Report) : Atlanta, GA-based Gray Television has returned 106.4% in the past year. The Zacks Consensus Estimate for the company’s current-year EPS has remained steady at $1.47 over the past 30 days. The company has a Zacks Rank #2 (Buy).
Price and Consensus: GTN
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>