Issue #28

One thrives on political ad data other turns enterprise data into profit

The media landscape is being rewritten — where traditional broadcasters are finding new value in data, and digital-first platforms are turning data into dollars.
As investors look beyond big tech for hidden opportunities, two under-the-radar stocks are bridging the gap between broadcast and bytes:

👉 One dominates America’s local TV networks and is gearing up for a revenue surge from the 2026 political cycle.
👉 The other is transforming raw enterprise data into real-time intelligence with AI-powered analytics.
👉 Both are attractively valued — and both are quietly preparing for their next major growth phase.

In this edition, we spotlight Gray Television (GTN) and Domo (DOMO) — two unconventional plays redefining how information, advertising, and data power the modern economy.

Gray Television (NYSE: GTN)

Gray Television (NYSE: GTN) is a dominant player in the local media landscape, owning and operating high-quality local television stations and digital assets across the United States. While not a pure-play "data stock," its business relies heavily on local market data, advertising data, and the digital distribution of its content, positioning it as a key beneficiary of an increasingly data-driven advertising ecosystem, especially in the political cycle.

Business Model and Revenue Streams 📺

Gray Television's business model is anchored in local broadcast television, providing viewers with essential local news, weather, and sports programming, and serving as a critical platform for advertisers. Its revenue is generated primarily from three core, cyclical, and interconnected streams:

• Core Advertising Revenue: Income generated from local and national businesses advertising on its stations. This is the base revenue and is influenced by general economic health and consumer spending.
• Retransmission Consent Revenue: Fees paid by cable, satellite, and digital video providers (like YouTube TV) to Gray to carry its broadcast signals. This revenue stream is generally high-margin, predictable, and grows through multi-year contract renewals, though it is subject to negotiation disputes.
• Political Advertising Revenue: A highly volatile, high-margin revenue stream that peaks dramatically during even-numbered election years (presidential and midterm cycles) and is minimal during odd-numbered, "off-cycle" years. This political spending is one of the most data-intensive advertising sectors, relying on micro-targeting voter data.

Impact of Current Macroeconomic Policies

Gray's performance is sensitive to macroeconomic uncertainty and interest rate policies, but in a specific way.

• Advertising Headwinds: General economic softness and higher inflation/interest rates can lead to advertiser caution, impacting core advertising revenue. Management has noted ongoing weakness in key categories like automotive advertising, a major traditional revenue source.
• Interest Rate Impact: Due to Gray's history of leveraging debt to finance major acquisitions (like Raycom and Meredith), high interest rates increase its borrowing and debt-servicing costs, putting pressure on profitability and free cash flow. Management has focused on balance sheet management and debt reduction to mitigate this.
• Political Tailwinds: The major counter-cyclical factor is the upcoming 2026 political advertising cycle, which is anticipated to be massive and provide a significant temporary uplift to both revenue and adjusted EBITDA, potentially overriding short-term macroeconomic headwinds.

Recent Performance and Corporate Developments 📈

Gray's recent performance is best understood through the lens of the political cycle and its strategic expansion through acquisitions.

Q3 2025 Financial Highlights: 💰

Gray reported its results for the off-cycle Q3 2025 (compared to the high political revenue of Q3 2024), demonstrating effective cost control despite a major cyclical revenue drop.

• Total Revenue: $749 million, which was at the high end of its guidance but reflected a significant 21.2% decline year-over-year (YOY), primarily due to the drop-off in political advertising from the 2024 election cycle.
• Net Loss/EPS: The company reported a GAAP net loss of $0.24 per share, which was significantly better than the analyst consensus for a loss of $0.41 to $0.37.
• Adjusted EBITDA: Adjusted EBITDA came in at $162 million, exceeding estimates, a positive sign of strong cost management.
• Cost Management: A major highlight was broadcast operating expenses falling significantly below the guidance range, demonstrating successful realization of cost actions and continued focus on cost containment.

Strategic Initiatives and Mergers: 🤝

Gray remains an active consolidator and is focused on strengthening its local market presence and diversifying its non-broadcast assets.

• Accelerated M&A Activity: The company is currently accelerating efforts to acquire new stations. Recent notable transactions include:
• An agreement to acquire television stations in ten markets from Allen Media Group for $171 million, including new markets and the creation of duopolies (owning two stations in the same market).
• A $80 million acquisition of Midwest stations from Block Communications, including a new "Big Four" duopoly in Louisville, Kentucky. These moves are designed to increase market power and realize operational synergies.
• Assembly Atlanta Development: Gray continues to advance its massive non-broadcast asset, Assembly Atlanta, a studio and mixed-use development, which is expected to become a meaningful source of non-cyclical cash flow in the coming quarters.

Path to Profitability and Fair Value 🎯

Path to Profitability

Gray's long-term profitability hinges on:

1. Cyclical Political Revenue: The biggest short-term factor is the 2026 election cycle, which will instantly restore a high level of profitability and free cash flow.
2. Cost and Debt Management: Continuing to realize synergies from past mergers and focusing on operational efficiency (as seen in Q3 2025) is critical for improving core margins. The company also needs to reduce its high debt load to lower interest expenses.
3. Non-Cyclical Growth: Successful monetization and ramp-up of Assembly Atlanta and growth in its digital and production assets will provide more stable, non-cyclical revenue, reducing reliance on the volatile political advertising cycle.

Fair Value

Gray is often viewed by analysts as undervalued relative to its future free cash flow, particularly when factoring in the upcoming political revenue surge.

• The company trades at notably low multiples, such as a Price-to-Earnings (P/E) ratio of approximately 11.42 (TTM) and a very low Price-to-Book (P/B) ratio of around 0.23, which suggests a deep discount.
• However, its high debt load and the volatility of its primary revenue stream (political cycles) introduce significant risk and compress its valuation multiples. For investors, the question of fair value is tied to the strength of the 2026 political cycle and the company's ability to deleverage.

Analyst Estimates and Ratings 📊

Gray has garnered favorable attention from analysts, particularly after the Q3 results indicated strong execution on cost control.

• Consensus Rating: The general consensus rating is "Strong Buy" or "Buy" from the analysts covering the stock.
• Recent Ratings: In the last 30 days, multiple firms have reiterated or upgraded their ratings:
• Benchmark recently raised its price target to $10.00 from $9.00 while maintaining a Buy rating, citing strong results and an improving balance sheet.
• Guggenheim reiterated its Buy rating.
• Price Target: The average 12-month price target is approximately $7.60 (with some estimates reaching $10.00), suggesting a significant upside from the current trading price around $5.00.

Investor-Focused Takeaway: Is GTN Right for Your Portfolio?

Gray Television offers a cyclical, high-leverage investment thesis dependent on the U.S. political cycle. For the digital age, its value is tied to its role as a key distribution and data-targeting platform for high-value local and political advertising spend.

What to Watch in the Near Term: 📈

• Q4 Revenue Guidance: The company's lower-than-expected guidance for Q4 2025 revenue (due to core advertising weakness) suggests continued near-term pressure that could maintain volatility.
• M&A Integration: Monitor the successful integration and synergy realization from its recent acquisitions, which is key to long-term operational efficiency.
• Debt Reduction: Watch the company's progress in paying down its debt, a critical factor for long-term health and valuation.

Recommendation:

Gray Television (GTN) is a high-risk, high-reward opportunity currently favored by analysts due to a compelling valuation and a clear, massive catalyst: the 2026 political cycle. For investors with a medium-term horizon (1-2 years) who are comfortable with cyclical media stocks and the risks associated with high debt, the current price is viewed as a fair entry point with significant potential upside as the political spending cycle accelerates.

Domo (NASDAQ: DOMO)

Domo (NASDAQ: DOMO) is a key player in the "Data-as-a-Service" segment, providing a cloud-based platform that unifies all business data, enables real-time analytics, and is increasingly leveraging AI to drive actionable insights and automate workflows. It addresses the critical business need for a single source of truth across siloed organizational data.

Business Model and Revenue Streams 📦

Domo operates on a pure Software-as-a-Service (SaaS) subscription model, providing its platform as the central hub for Business Intelligence (BI), analytics, and data application development. Its primary business strategy is a "land, expand, and retain" approach, focusing on deeply embedding the platform into customer operations.

Core Revenue Streams:

• Subscription Revenue (Dominant): This is the main and recurring revenue source, accounting for over 90% of the total. Fees are based on the customer's chosen package, often tied to usage or data volume, which is a key strategic shift.
• Professional Services Revenue: Income generated from implementation, training, and consulting services to help clients integrate the Domo platform with their existing data architecture. While lower-margin, this stream is essential for successful customer adoption and long-term retention.

Strategic Shift to Consumption-Based Pricing

Domo has been strategically transitioning its pricing model from a traditional seat-based model to a consumption-based model, where customers pay based on the volume of data processed and the platform capabilities they use. This is a critical strategic pivot designed to:

• Align Value with Price: As usage grows, so does revenue, incentivizing wider adoption across the organization.
• Improve Retention: Consumption customers have demonstrated stronger gross retention rates (over 90%) and net retention rates (over 100%) compared to older seat-based customers.

Impact of Current Macroeconomic Policies

As an enterprise software vendor, Domo is sensitive to the macroeconomic environment in several ways:

• Corporate Spending Headwinds: High interest rates and general economic uncertainty often lead companies to tighten budgets for software and technology spending. This can result in delayed contract renewals, longer sales cycles, and reduced expansion within existing accounts, putting pressure on Annual Recurring Revenue (ARR) growth.
• Focus on Efficiency: Conversely, the macroeconomic environment forces businesses to seek greater operational efficiency. Domo's platform, which promises real-time insights and AI-driven automation to cut costs and optimize processes, offers a value proposition that remains relevant even during downturns.
• Financial Constraints: The company has a history of non-GAAP losses and must manage a significant debt load. Elevated interest rates increase the cost of servicing this debt, which reduces the company's financial flexibility for growth investments. Effective cost management and accelerated free cash flow generation are paramount.

Recent Performance and Corporate Developments 📈

Domo has demonstrated resilient execution, particularly in transitioning its customer base and achieving positive cash flow.

Q2 Fiscal Year 2026 Financial Highlights: 💰

Domo reported results for the quarter ended July 31, 2025, showing strong cost control and a beat on the bottom line.

• Total Revenue: $79.7 million, a modest 1.7% increase year-over-year.
• Adjusted EPS (Non-GAAP): $0.02, a significant beat against analyst consensus estimates of a loss of $-\$0.21$. This marks the first time Domo has reported positive non-GAAP EPS, driven by effective cost optimization.
• Adjusted Operating Income: $6.1 million, translating to a positive 7.7% operating margin, a massive improvement from the prior year.
• Free Cash Flow (Adjusted): The company has been effective in generating positive adjusted free cash flow, a key signal of improved business health and operational discipline.
• Consumption Model Adoption: Adoption of the consumption-based pricing model has accelerated, reaching over 65% of Annual Recurring Revenue (ARR), supporting future growth and retention.

Strategic Initiatives and Mergers: 🤝

There have been no major M&A announcements. Domo's focus is on product innovation and ecosystem expansion:

• AI and Data Products Platform: Domo is heavily focused on integrating secure and private AI into its platform, including the development of AI agents for automating tasks, conversational AI for data exploration, and AI-assisted workflows. This focus on "AI and Data Products" is central to its future growth narrative.
• Ecosystem Expansion: Domo continues to strengthen its strategic partnerships, such as with Panasonic and Showpass, to deliver embedded analytics and expand its global reach, particularly in the APAC region.

Path to Profitability and Fair Value 🎯

Path to Profitability

Domo’s path to sustained GAAP profitability rests on:

1. Operating Leverage: Maintaining the strong cost discipline demonstrated in recent quarters to ensure revenue growth translates efficiently into margin expansion.
2. Consumption Model Success: Successfully migrating the remaining customer base to the high-retention, high-expansion consumption model. This will drive higher Net Recurring Revenue (NRR) over time.
3. AI Monetization: Successfully monetizing its new AI features, which should drive new use cases and increase platform usage, thereby boosting consumption revenue.

Fair Value

As a growth-oriented SaaS company that has only recently achieved positive non-GAAP EPS, Domo's valuation is complex.

• Valuation Multiples: Domo has a high forward Price-to-Earnings (P/E) ratio (over 600), reflecting the market's expectation of rapidly accelerating future earnings. Conversely, its Price-to-Sales (P/S) ratio (around 1.7x forward) is significantly low compared to most high-growth SaaS peers, suggesting the stock may be undervalued relative to its topline revenue and underlying business stability.
• The Bottom Line: For analysts, the improved free cash flow and a clear, albeit gradual, path to non-GAAP profitability suggest the current price is a discounted opportunity based on its long-term potential in the data analytics and AI platform market.

Analyst Estimates and Ratings 📊

Domo enjoys strong analyst support, reflecting confidence in its strategic pivot and operational improvements.

• Consensus Rating: The consensus rating from analysts is a "Buy", with a breakdown of 13% Strong Buy, 50% Buy, and 38% Hold (as of November 2025). This aligns with the requirement for high recent buy ratings.
• Recent Ratings: Firms have reiterated their positive outlook following the strong Q2 2026 earnings beat.
• Price Target: The average 12-month price target is approximately $18.50 (with some targets as high as $21.00), suggesting a potential upside of over 40% from the current share price of around $13.00.

Investor-Focused Takeaway: Is DOMO Right for Your Portfolio?

Domo offers exposure to the growing demand for real-time, AI-driven data insights. The company has made a strategic and operational shift toward efficiency and a high-retention business model (consumption pricing), which is now yielding improved financial results and positive non-GAAP EPS.

What to Watch in the Near Term: 📈

• ARR Growth: The primary concern is the relatively slow revenue growth (1.7% YoY). Investors need to see the NRR and consumption model successfully accelerate the topline in the coming quarters.
• Debt Management: Continued positive Free Cash Flow generation will be key to managing its debt and increasing financial flexibility.
• AI Adoption: Monitor the success and contribution of the new AI features and partnerships, as these are the levers for future expansion.

Recommendation:

Domo (DOMO) is viewed as a high-potential turnaround and growth story in the data analytics space. The stock's valuation is compelling given the average analyst target, and the strong consensus Buy rating suggests confidence in the management team's ability to execute its path to sustained profitability. While the slow revenue growth presents a near-term risk, the operational improvements and focus on AI position it as a solid long-term bet on the increasing data needs of the digital enterprise.

Final Take: Two Data-Driven Stocks With Very Different Engines — and One Big Opportunity

Whether it’s local broadcast stations turning political ad dollars into profits, or cloud-based platforms transforming enterprise data into actionable AI workflows, Gray Television (GTN) and Domo (DOMO) represent two sides of the modern data revolution.

Both companies are under the radar. Both are attractively priced. And both have clear, event-driven catalysts heading into 2026.

📺 Gray Television (GTN) – Riding the Political Ad Wave
✔ Poised for a major revenue and EBITDA spike in the 2026 election cycle
✔ Trades at deep value multiples with strong analyst upside
✔ Focused on reducing debt and unlocking non-cyclical cash flow from Assembly Atlanta
➤ Best for: Investors seeking a medium-term catalyst with high potential upside tied to political ad spending and media consolidation.

📊 Domo (DOMO) – Quiet AI Turnaround in Enterprise SaaS
✔ Pivot to consumption-based pricing and AI features is improving retention and margins
✔ First non-GAAP profit and positive free cash flow signal a turnaround
✔ Strong analyst consensus with >40% upside to target
➤ Best for: Investors looking for a high-risk, high-reward SaaS recovery story in a massive and growing enterprise data market.

Investor Insight:

💰 Want a 2026 earnings surge from political ad spend? → GTN
​🧠 Want a software platform quietly leveraging AI and recurring data revenue? → DOMO

These are two very different business models, but both are data-first companies with major catalysts ahead. For investors hunting value outside of big tech, GTN and DOMO offer powerful narratives — and a chance to ride the next wave of monetized data.

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Happy Trading
​— Team Premium Stock Alerts