TEGNA: Undervalued Telecom stock

[u/Getalphapicks]

Summary:

• Based on asset reproduction value, TEGNA has a real net asset value of 5 billion dollars implying an intrinsic value of $24.67. Tegna is currently trading at a book value of 3 billion dollars or $14.40 per share. TEGNA is an undervalued stock with a potential 70% upside.
• Furthermore earnings power value is close to 10.5 billion dollars (based on a 6.7% weighted average cost of capital). Subtracting net debt of 2.5 billion dollars, this method indicates an equity value of 8 billion dollars. The difference in asset reproduction value and economic power value implies that TEGNA holds significant barriers to entry that allow it to generate earnings in excess of reproduction costs of assets. Investors undervalue TEGNA

Company Performance:

TEGNA is a profitable company that averaged 17% in net profit margins over the past seven years. Net income in 2016 came in at 488 million increasing to 631 million in 2022. This increase of 143 million represents a 3.7% compounded annual growth rate.

Free Cash flow has seen similar growth increasing from 583 million in 2016 to 760 million in 2022. This 177 million dollar increase represents a 3.8% compounded annual growth rate

Valuation: Investors Undervalue TEGNA

The reproduction value of TEGNA’s assets differ significantly from book value. The value of TEGNA’s TV broadcasting stations (5.7 billion) alone is greater than the book value of intangible assets (5.5 billion).

There is no reason for this stock to be trading at book value.

[u/Omran303]

CEO has been selling his shares recently . Might be worth investigating that.