NEXSTAR MEDIA GROUP INC (NASDAQ:NXST) - A Potentially Undervalued Stock with Strong Fundamentals

NEXSTAR MEDIA GROUP INC (NASDAQ:NXST) was identified as a decent value stock by our screening process. The company combines an attractive valuation with solid profitability and a reliable dividend, making it a candidate for value investors. Below, we break down the key aspects of its financial profile.

Valuation

NXST stands out with a Valuation Rating of 8/10, indicating it trades at a discount relative to its fundamentals. Key points include:

• P/E ratio of 8.92, well below the industry average of 22.28 and the S&P 500’s 25.05.
• Forward P/E of 6.58, suggesting further upside if earnings stabilize.
• Enterprise Value/EBITDA and Price/Free Cash Flow ratios are also favorable, ranking better than 82% and 88% of industry peers, respectively.

Profitability

The company earns a high Profitability Rating of 9/10, supported by:

• Strong margins: Operating margin of 23.88% and profit margin of 13.36%, outperforming most competitors.
• High returns: ROE of 31.99% and ROIC of 8.37%, reflecting efficient capital use.
• Consistent earnings and cash flow over the past five years.

Dividend

NXST offers an appealing Dividend Rating of 8/10, with:

• 4.27% dividend yield, above the industry average.
• 10+ years of dividend growth, with a 30.53% annual increase rate.
• A sustainable payout ratio of 30.33%.

Financial Health

The Health Rating of 5/10 reflects some leverage concerns but also strengths:

• Debt/Equity ratio of 2.84, higher than ideal but manageable given cash flows.
• Current and Quick Ratios above 1.6, indicating sufficient liquidity.
• Share count reduction over time, a positive signal for shareholders.

Growth

While growth prospects are mixed (Growth Rating of 5/10), past performance is strong:

• EPS grew 67% YoY, with a 5-year annualized growth rate of 39.47%.
• Revenue expanded 9.61% last year and 12.21% annually over five years.
• Near-term estimates show slower growth, which may already be priced in.

For a deeper look, review the full fundamental report for NXST.

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Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.