NXST – Your Next Star Growth Stock


I recently had a regular follower of my work ask me to analyze Nexstar Media Group, Inc. (NXST) a stock that I frankly had never looked at before. However, once I began evaluating this small/mid-cap company, I became intrigued about its possibilities as both a pure growth stock and a dividend growth stock. Consequently, I thought I would share this finding and perhaps encourage any readers familiar with it to participate in my ongoing research and due diligence process. Nevertheless, from what I have seen so far, I am very seriously considering adding this company to both my growth and dividend growth research candidate lists because I am intrigued by its yield, growth potential, and its low current valuation.

About Nexstar Media Group, Inc.

Nexstar Media Group, Inc. is America’s largest local television and media company. They have 198 total stations that reach 62% of the US households. They also host 120 local websites and 284 mobile apps that all operate in 116 television markets.

Chairman and CEO, Perry A. Sook founded the company in 1996 with the purchase of the Scranton Pennsylvania television station WYOU. From these early beginnings, he has built the business into the largest of its kind in the United States. In 2003 the company went public, which was just after acquiring Quorum Broadcasting and other stations that doubled Nexstar’s station portfolio.

In 2005 Nexstar created a new type of relationship by requesting payment TV services for retransmission of local programming. According to Morningstar:

“retransmission revenue has grown rapidly as a source of revenue for local television stations. If a pay-TV distributor like Comcast or Dish Network wants to carry one of the four broadcast networks in a specific market, it must retransmit the local station feed for that market. For Nexstar, retrans revenue was 45% of total 2019 revenue, up from 25% in 2014. While the growth in retrans revenue has been and will continue to be a growth driver for local station owners, we project that national network owners will continue to raise both network affiliation fees and reverse compensation fees, decreasing the bottom-line benefit to Nexstar.”

Nevertheless, advertising is a very important revenue source representing just under 44% of total 2019 revenues for nonpolitical advertising. However, Morningstar further points out that over 70% of nonpolitical advertising revenue is generated at the local level by selling at times to area businesses. These include but are not limited to restaurants, auto dealerships, and retailers, all of which has suffered during the pandemic. Nevertheless, political advertising will continue to be a major and important source of revenue for the company.

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Disclosure: No position.

Disclaimer: The opinions in this article are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks ...

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