On Tuesday, Guggenheim held a consistent stance on The E.W. Scripps Company (NASDAQ:SSP) shares, maintaining a Neutral rating. The decision follows a review of the company's first-quarter results and management's second-quarter outlook. Guggenheim's forecast for 2024 anticipates challenges due to continued advertising pressure affecting both stations and National Networks.
However, expectations of modest retransmission (retrans) growth and a robust political advertising climate, which is projected to bring in $262 million for the year, are also factored into the forecast.
The E.W. Scripps Company, a local TV broadcaster, is valued by Guggenheim based on a multiple of approximately 7 times enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA). This valuation uses a blended adjusted EBITDA forecast for the years 2023 and 2024. The chosen multiple aligns with the historical average for peers in the local TV broadcasting sector and takes into account the fluctuations in profitability that occur between even and odd years due to the political advertising cycle.
The analyst's comments included a rationale for the valuation method, noting that it accounts for the inherent variability in earnings associated with the political cycle. This approach aims to provide a balanced view of the company's financial performance over a two-year period, considering both the expected downturns and upswings.
The E.W. Scripps Company operates a portfolio of local television stations and national networks, with a business model that is sensitive to advertising trends and political cycles. The company's performance is closely watched by investors, particularly as it navigates the challenges and opportunities presented by the advertising market.
In summary, Guggenheim's assessment reflects a cautious but stable outlook for The E.W. Scripps Company, acknowledging the current industry pressures while also recognizing potential areas of growth.
InvestingPro Insights
In light of Guggenheim's neutral stance on The E.W. Scripps Company (NASDAQ:SSP), recent data from InvestingPro offers additional context that may be of interest to investors. The company's market capitalization stands at a modest $322.35 million, and it is trading at a low Price / Book multiple of 0.43, indicating potential undervaluation relative to its book value. Despite recent volatility, with the stock price experiencing a significant 36.77% drop over the last three months, the company's liquid assets exceed its short-term obligations, which may provide some financial stability.
InvestingPro Tips suggest that while the stock has faced downward pressure, the valuation implies a strong free cash flow yield, which could be appealing to value-oriented investors. Additionally, analysts predict the company will turn profitable this year, a potential upside amidst the current challenges. For those interested in a deeper analysis, there are additional InvestingPro Tips available that could further inform investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for access to these insights.
The E.W. Scripps Company's ability to navigate the advertising pressures and capitalize on the projected robust political advertising climate will be key to its performance. With a fair value estimated by analysts at $9.25 and InvestingPro's fair value at $4.11, investors should consider the range of perspectives and data points available as they assess the company's prospects in a dynamic market environment.
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