Townsquare Media TSQ shares have dipped by 3.8% year to date (YTD), underperforming the Zacks Consumer Discretionary Sector’s appreciation of 27.8%.

Townsquare also lagged the Zacks Broadcast Radio and Television Industry and its peers like Apple AAPL, Fox FOX and Spotify SPOT. While the industry has appreciated 55.1%, shares of Spotify, Fox and Apple have gained 162.6%, 60.1% and 26.1%, respectively.

Despite the underperformance, strong growth of the Digital Advertising segment, driven by differentiated offerings from competitors, bodes well for investors. TSQ is a Digital First Local Media Company and its unique strategy and solution are tailwinds.

TSQ’s Digital Platform Performance Aids Prospects

During the third quarter of 2024, TSQ’s top line was driven by the strong performance of its digital platform. Digital platform revenues contributed 52% to TSQ’s total revenues.

Townsquare’s transition from a radio broadcast company to a digital-first media company bodes well for investors as it enables TSQ to provide customers with not only highly differentiated offerings but also to expand its market reach outside the highest-performing 50 cities in the United States.

The company’s digital products, which are completely in-house, enable TSQ to manage and control relationships with clients, leading to an enhanced customer experience and greater average spend.

Townsquare’s new partnership model is expected to drive the top line as it helps the company to not only enter new markets and increase digital revenue growth but also utilize capital to meet other corporate goals effectively. TSQ aims to share expertise with its partners by providing customised and data driven strategies to meet needs of businesses.

TSQ has partnered with SummitMedia, a broadcaster operating in local media properties in nine markets. This partnership will enable Townsquare to monetize Ignite’s opportunity and to expand its market reach as a digital programmatic advertising provider in the broadcasting and digital agency market. 

Inspite of weakness in national advertising spends, TSQ’s differentiated and in-house Digital Advertising offering is driving topline and gaining market share. 

For the fourth quarter of 2024, TSQ expects its Digital Advertising revenues to increase 15% year over year.

TSQ’s Short-Term Earnings Estimate Positive

The Zacks Consensus Earnings Estimate for both the full year 2024 and the fourth quarter of 2024 has shown an increasing trend over the past 30 days.

For the fourth quarter of 2024, TSQ expects its net revenues to be between $114.8 million and $118.8 million and adjusted EBITDA to be between $30.8 million and $31.8 million. 

The Zacks Consensus Estimate for fourth-quarter 2024 earnings is currently pegged at 60 cents per share, up 11.11% over the past 30 days and indicating 76.47% growth from the year-ago quarter.

The consensus mark for fourth-quarter 2024 revenues is pegged at $116.41 million, indicating year-over-year growth of 1.41%. 

For the full year of 2024, TSQ expects its total revenues to be between $448 million and $452 million and adjusted EBITDA to be between $100 million and $101 million. 

The consensus mark for earnings is pegged at $1.07 per share, up 10 cents over the past 30 days but indicating a decline of 23.57% from the year ago quarter.

For 2024, the Zacks Consensus Estimate for revenues is pegged at $449.58 million, indicating a year-over-year decline of 1.02%.  

TSQ’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missing in the remaining two, the average negative surprise being 21.48%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

TSQ Valuation Favorable for Investors

Townsquare shares are currently undervalued, as suggested by a Value Score of A. 

In terms of the forward 12-month Price/Earnings (P/E) ratio, TSQ is trading at 7.97X, lower than the Zacks Consumer Discretionary Market’s 19.76X.

Townsquare currently sports a Zacks Rank #1 (Strong Buy), which implies that investors may want to consider accumulating TSQ shares.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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