(We are reissuing this article to correct a mistake. The original article, issued on 2/4/16, should no longer be relied upon.)
The television and radio industry has changed many times in its long history. Not long ago, cable and DVDs was a staple in everyone's house, but now Netflix (NASDAQ:NFLX) and Amazon (AMXN) have all but eliminated DVDs with their streaming programming and even helped some people cut the cable chord. On the radio side, Pandora (NYSE:P) and Apple (NASDAQ:AAPL) have changed the way people listen and buy music.
However, those companies aren't the only players when it comes to television and radio entertainment. There are other options when entering the space that are currently overlooked and present value. While they might not be as coveted as the bigger names, these are solid companies with good fundamentals.
Broadcast Radio/TV is ranked 29 out of 265 (Top 11%) in the Zacks Industry Rank. Let's take a look at some names within the industry that should outperform going forward.
AMC Networks (NASDAQ:AMCX) is a Zacks Rank #2 (Buy) that owns and operates various cable television brands, while producing program and movie content. The company's familiar programming includes AMC, IFC, Sundance Channel, BBC America, WE tv and IFC films. Some popular shows bringing attention to the AMC channel have been Mad Men, Breaking Bad, The Walking Dead, and Better Call Saul.
The AMC model of original programming has paid off well as the company has seen sales growth of 22%, and EPS growth of 31%, year over year. Furthermore, Estimates for 2016 are rising, with consensus estimates heading 2.5% higher over the last 90 days.
AMC has a market cap of $5 Billion with a Forward P/E of 12. The company sports a Zacks Style Score of "B" in Value and Momentum.
The stock has a short ratio of 9, with 11% of the float short. We could see a violent short squeeze if the company beats estimates on the next earnings report on February 25th.
EPS surprises to the upside have been positive of late, with the company surprising to the upside six straight times. A continuation of the streak should propel the stock price higher after a few quarters of consolidation.
Groupo Televisa (NYSE:TV) is the largest media company in the Spanish speaking world and a Zacks Rank #1 (Strong Buy). The company operates four different segments: Content, Sky, Telecommunications and Other Businesses.
The Mexico City based company has a $15 Billion market cap and a Forward P/E of 27. The company sports a Zacks Style Score of "B" in growth as it has expected EPS growth of almost 25%.
Analysts are in full agreement in revising estimates higher for the current year. In the last 90 days, estimates have gone from $1.02 to $1.17, a change of 14.7%.
The E.W. Scripps Company (NYSE:SSP) is a Zacks Rank #1 (Strong Buy) that serves audiences and businesses through a growing portfolio of television, radio and digital media brands. The company is one of the nation's largest independent TV station owners, with 33 television stations in 24 markets and a reach of nearly one in five U.S. households. It also owns 34 radio stations in eight markets. Scripps also runs an expanding collection of local and national digital journalism and information businesses, including podcast industry leader Midroll Media, over-the-top video news service Newsy and weather app developer WeatherSphere.
The Cincinnati based company has a market cap of $1.5 Billion with a Forward P/E of 12. Digital revenue came in last quarter in the mid-30 percent range, showing why they sport a Zacks Style score of "A."
The recent pullback in the stock might provide an opportunity before the March 2nd earnings report. Over the last 90 days, consensus estimates for the current year have risen 35%, going from $0.14 to $0.19.
After a rough patch, SSP has surprised to the upside on EPS two quarters in a row. The short ratio is over 10 with 8% of the float short. If we get another positive report, we could see some upside momentum in price.
Entercom (NYSE:ETM) is the fourth largest radio broadcasting company in the US and a Zacks Rank #1 (Strong Buy). The company owns radio stations in various formats such as talk, news, classic rock, alt-rock, country and others. The company operates 125 radio stations in 26 markets.
Entercom has a market cap of $400 Million with a Forward P/E of 12. The stock sports Zacks Style Scores of B in Value and Growth.
Analysts have been raising estimates leading up into the company's earnings report on February 11th. Over the last 60 days, current year consensus has gone from $0.68 to $0.73, a rise of 7.3%.
CEO Joseph Field gave some input after the most recent earnings report:
"While we are delighted with our progress and opportunities at the new stations, we are particularly pleased by our strong market share gains in the rest of our markets which enabled us to post approximately 3% same-station revenue growth for the quarter, and just over 4% growth when excluding the impact of political advertising. We also achieved strong double-digit growth in Free Cash Flow and Adjusted Net Income Per Share and believe we are very well positioned for continued strong performance in 2016 and beyond."
Entercom has a good track record of beating earnings, with eight out of their last nine quarters coming in above expectations.
Radio and television companies are being overlooked because of new ideas and new innovations. Rumors of their demise are greatly exaggerated as these stocks are still seeing growth and value opportunities.