NXST - Embedded Expectations Analysis - 2020 10 12
Nexstar Media Group, Inc. (NXST:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 12.8x Uniform P/E. At these levels, the market has somewhat bearish expectations for the firm, but management is confident about their local news segment, sustaining viewership levels, and News Nation NowSpecifically, management is confident in their ability to provide viewers and users continuous access to local news and other services such as health and economic challenges brought on by the pandemic. Furthermore, they are confident that changes in media consumption showcase the inherent strength of their leading local brands, and that local broadcast television evening news viewership remained high despite states and localities reopening. Management is also confident presidential campaigns' fundraisings bode well for their upcoming political revenue trajectory, their decision to allocate approximately $594mn in cash from operations and investments toward debt reduction and opportunistic share repurchases, and that time-proven operating strategies will enable them to overcome near-term challenges. In addition, they are confident they will be able to rework the existing buys into the News Nation primetime offerings, and that their News Nation Now app will create monetization opportunities
Nexstar Media Group is a television broadcasting and digital media company focused on the acquisition, development and operation of television stations and interactive community websites and digital media services. The stations provide over-the-air programming. This programming includes programs produced by networks with which the stations are affiliated; programs that the stations produce; and first-run and rerun syndicated programs that the stations acquire. The company's digital media businesses provide digital publishing and content management platform, digital video advertising platform, social media advertising platform and other digital media solutions to media publishers and advertisers.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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