The share of Nexstar Media Group is B
The shares of Nexstar Media Group (NAS: NXST, financial data at 30 years) show all the signs of a fair valuation, according to the calculation of GuruFocus Value. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 145.99 per share and market capitalization of $ 6.3 billion, shares of Nexstar Media Group are valued at fair value. The GF value for Nexstar Media Group is shown in the table below.
Given that Nexstar Media Group is measured at fair value, its long-term stock return is expected to be close to the growth rate of its business, which has averaged 21.9% over the past three years and is expected to grow by 4.24% per year over the next three years. at five years.
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Since investing in companies with poor financial strength could result in a permanent loss of capital, investors should carefully consider the financial strength of a company before deciding to buy shares. Examining the cash-to-debt ratio and interest coverage can provide a good initial perspective on the financial strength of the business. Nexstar Media Group has a cash-to-debt ratio of 0.05, which ranks in the bottom 10% of companies in the media industry – Diversified. On this basis, GuruFocus ranks the financial strength of Nexstar Media Group at 3 out of 10, which suggests a poor track record. Here is Nexstar Media Group’s debt and cash flow over the past few years:
It is less risky to invest in profitable companies, especially those that have demonstrated consistent profitability over the long term. A business with high profit margins is also generally a safer investment than a business with low profit margins. Nexstar Media Group has been profitable 8 in the past 10 years. In the past twelve months, the company reported sales of $ 4.5 billion and earnings of $ 18.6 per share. Its operating margin is 28.64%, which ranks it better than 93% of companies in the Diversified Media industry. Overall, GuruFocus ranks Nexstar Media Group’s profitability at 9 out of 10, indicating strong profitability. Here is Nexstar Media Group’s revenue and net income over the past few years:
Growth is probably one of the most important factors in the valuation of a business. GuruFocus research has shown that growth is closely tied to the long-term performance of a company’s stocks. If a company’s business is growing, the business typically creates value for its shareholders, especially if the growth is profitable. Likewise, if the income and profits of a business decrease, the value of the business will decrease. Nexstar Media Group’s 3-year average revenue growth rate is over 89% for companies in the Media Sector – Diversified. Nexstar Media Group’s 3-year average EBITDA growth rate is 32.3%, which ranks better than 83% of media companies – Diversified.
One can also assess a company’s profitability by comparing its return on invested capital (ROIC) to its weighted average cost of capital (WACC). Return on Invested Capital (ROIC) measures how well a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay on average to all of its security holders to finance its assets. If the return on invested capital exceeds the weighted average cost of capital, the company is likely to create value for its shareholders. Over the past 12 months, Nexstar Media Group’s ROIC is 7.73 while its WACC is 7.23. Nexstar Media Group’s historical ROIC vs WACC comparison is shown below:
In short, the action of Nexstar Media Group (NAS: NXST, 30 years Financials) gives all indications of being just valued. The company’s financial situation is bad and its profitability is strong. Its growth ranks better than 83% of companies in the Media industry – Diversified. To learn more about Nexstar Media Group shares, you can view its 30-year financial data here.
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