NXST - Embedded Expectations Analysis - 2021 09 28
Nexstar Media Group, Inc. (NXST:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with an 12.1x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about leverage levels, revenue growth, and a decline in political advertising spending.Specifically, management may lack confidence in their ability to sustain revenue growth, maintain operating margin expansion, and manage direct operating expenses. In addition, they may have concerns about declining local news ratings and they may be overstating the sustainability of CPM increases at News Nations. Furthermore, management may lack confidence in their ability to implement a 24/7 broadcast schedule and keep within their leverage target range. Moreover, they may be concerned about the pace of recovery in economic activity, the sustainability of ad spending from the service category, and the revenue impact of declining political ad spending. Finally, management may be overstating the resiliency of their business model and they may lack confidence in their ability to further improve revenue share gains and leverage their scale to drive top-line growth.
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
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