The Gray area in television station trading


Gray TelevisionThe stock price of Gray Television has followed a trajectory since the beginning of 2012 that NASA would be proud of, leading at least one Wall Street watchdog touting the group as a potential target in today’s hyper-charged TV station-trading market.

A share of the company’s stock could be had for one of those seldom-seen bills with an engraving of Thomas Jefferson on it – we refer of course to the two-dollar bill, which we do not remember fondly since we were working with cash registers that did not include a place to put the gnarly things at the time the government foisted them on us back in the 70s.

Anyway, the price was in going for three of those bills, or about $6, by the time March 2013 rolled around. It reached $7.15 but has taken a bit of a hit as we write this 6/26/13 at 2:30 eastern – the price current quote from the company website is $6.98.

Seeking Alpha is the market observer who identified Gray as a possible target. The opinion seems to be based on little more than the recently-announced $2.2B Gannett-Belo merger alongside the meteoric ascent of Gray’s stock price.

An analyst at Motley Fool noted that cash flow is an important factor in evaluating a company, and noted that in Gray’s case, many of the components that are looking good on its bottom line are not replicable. Among the categories are many related to various tax elements, and MF believes that such things account for as much as 22% of Gray’s free cash flow of late.

Therefore, MF believes opinions of Gray may be a bit inflated.

Finally Barron’s introduced another reason to step on the brakes, at least gently – the exit, or as Barron’s put it, the “abrupt departure” of President/COO Robert S. Prather.

So in the end, the overarching theme seems to be to keep an eye open for Gray developments.