Local television broadcasting and media company Gray Television (NYSE: GTN) beat Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 24.2% year on year to $792 million. The company expects next quarter’s revenue to be around $762.5 million, close to analysts’ estimates. Its GAAP loss of $0.24 per share was 26.5% above analysts’ consensus estimates.

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Hilton Howell, Jr., Chairman and CEO, commented, “We delivered strong fourth quarter financial results, with revenue and Adjusted EBITDA exceeding consensus expectations. The quarter benefited from better-than-expected MVPD subscriber trends, which drove year-over-year growth in “Net Retransmission Revenue” (retransmission consent revenue less network affiliation fees).

Company Overview

Specializing in local media coverage, Gray Television (NYSE: GTN) is a broadcast company supplying digital media to various markets in the United States.

Revenue Growth

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Unfortunately, Gray Television’s 5.4% annualized revenue growth over the last five years was weak. This was below our standard for the consumer discretionary sector and is a tough starting point for our analysis.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Gray Television’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 2.9% annually.

We can better understand the company’s revenue dynamics by analyzing its most important segments, Retransmission and Advertising, which are 49.5% and 42.3% of revenue. Over the last two years, Gray Television’s Retransmission revenue (affiliate and licensing fees) was flat while its Advertising revenue (marketing services) averaged 6.2% year-on-year declines.

This quarter, Gray Television’s revenue fell by 24.2% year on year to $792 million but beat Wall Street’s estimates by 1.5%. Company management is currently guiding for a 2.5% year-on-year decline in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 11.9% over the next 12 months. Although this projection implies its newer products and services will spur better top-line performance, it is still below the sector average.

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Operating Margin

Gray Television’s operating margin has been trending down over the last 12 months and averaged 18.4% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

In Q4, Gray Television generated an operating margin profit margin of 14.6%, down 16.5 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Gray Television, its EPS declined by 18.9% annually over the last five years while its revenue grew by 5.4%. This tells us the company became less profitable on a per-share basis as it expanded.

In Q4, Gray Television reported EPS of negative $0.24, down from $1.59 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street is optimistic. Analysts forecast Gray Television’s full-year EPS of negative $1.42 will flip to positive $2.14.

Key Takeaways from Gray Television’s Q4 Results

It was good to see Gray Television beat analysts’ EPS expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 3.1% to $4.92 immediately after reporting.

Sure, Gray Television had a solid quarter, but if we look at the bigger picture, is this stock a buy? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).