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($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
Our country has become a media circus. No one approves of it, but we might as well make money off of it. There is already talk of billions of dollars of ad revenue that is going to be spent on politics alone. It’s crazy, yes, but I might as well make money off of it.
Today I bought stock in Nexstar Media Group (NXST) at 91.39. I will sell it in 4 to 6 weeks at 105.56. Here’s why I like NXST:
It all starts with the chart. The reason why this stock is going up is because it’s got a good story to tell and we haven’t reached the end of the book:
This stock is up 24% in the last 12 months, however most of that climb has occurred in the last 2 months alone. What is especially interesting is that the stock is trading at a P/E of only 7 while paying a 2% dividend. In essence, we have a growth stock trading at the multiple of a value stock. It’s like going to Spag’s to buy a stock.
Nexstar Media Group, Inc. is one of the world’s leading diversified media companies and is headquartered in Irving, Texas, right next to Jerry World. In June 2018, Nexstar marked 22 years of excellence in local programming and service since Perry A. Sook, Chairman, President and CEO, founded the Company. Upon completion of its $4.6 billion acquisition of Media General in January 2017, Nexstar Broadcasting Group, Inc. was re-named Nexstar Media Group, Inc. The Company is now one of the largest broadcast groups in the United States in terms of the number of owned or operated television stations /markets and expected total annual revenue.
Nexstar owns, operates, programs or provides sales and other services to 174 television stations and their related low power and digital multicast signals reaching 100 markets or approximately 38.7% of all U.S. television households. In 2015, (and prior to the acquisition of Media General), Nexstar generated record net revenue of $896 million, broadcast cash flow of $350 million, adjusted EBITDA of $305 million and free cash flow of $208 million. That’s right, this company has TV stations that get to 40 percent of the country, that’s #2 in the country. This is a company with over $2 billion in revenue and $3.8 billion market cap. We’re not fooling around here.
Nexstar, with its 9000 employess, leverages localism to bring services and value to consumers and advertisers through its television, digital and mobile media platforms. Nexstar’s portfolio includes all primary major network affiliates, including ABC, CBS, NBC, Fox and The CW, as well as multicast affiliates Telemundo, Me-TV, Bounce TV and more. Remember, local ads are still big business and Nexstar produced over 200,000 hours of local content last year. You don’t have to sell million dollar super bowl spots to make ad revenue. I watch local news, do you? The local pet store and car dealer always take out TV ads. This company has media outlets in six Top 25 markets and twenty Top 50 markets. In summary, it is one of the nation’s largest providers of local news, lifestyle, sports and network programming. They are #1 or #2 viewership share ranking in 76% of markets. They have stable core advertising revenue and growing political advertising revenue.
NXST completed the transformative acquisition of Media General (NYSE: MEG) for $4.6 bn in 1Q17 which Increased broadcast portfolio by approx. two thirds and more than doubled revenue and adjusted EBITDA. With higher net income, expected to generate FCF over $615 mm in the 2018/2019 cycle. The company has reduced total net debt by ~$670 mm since the MEG transaction close. As a show of confidence in this company, they have increased their cash dividend 25% to $1.50 annually in 2018, marking the fifth annual consecutive increase.
This company has disciplined, market-tested management team with history of operational excellence and deep leadership bench, most of whom have at least 20 years of industry experience. Nexstar has the financial strength and flexibility to pursue additional select accretive acquisitions.
Here’s why I really love this company. Everyone is talking about how cable is dead and how Netflix is taking over. I don’t even know how Netflix works. According to Goldman Sachs, the disparity between Netflix subscriber growth (+22 mm) and cord cutting (-3 mn) indicates that Netflix has been a supplement, rather than a replacement, to subscription pay TV services. This is a thoughtful analysis as it looks like people are just adding on Netflix as another source of entertainment, rather than a substitute for what they have. As a result, the largest ad market globally, the TV ad-revenue stream, has remained stable. U.S. TV station advertising revenue (core + political) is projected to grow at a compound annual rate of 2.4% (2017 – 2022) and with it, will be NXST’s profits!
Management raised 2018/2019 average annual FCF guidance in 3Q18 as a results of higher-than anticipated political revenues generated during the 2018 mid-term election cycle. It’s just going to get more and more crazy. Trust me on this one.
The value of this investment is incredible. With a PE ratio of 7, this level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 17.7. If we focus on the long-term PE trend, Nexstar Media’s current PE level puts it below its midpoint over the past five years. Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 29.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. Meanwhile, the company’s recent earnings estimates from ANAL-ysts have been trending higher.
Here’s what the CEO, Perry Sook, had to say:
“Nexstar delivered another period of consensus beating growth across every one of our cash flow metrics including 38% year-over-year growth in free cash flow on what is essentially a same station comparison. Our record results were driven by strength in three revenue streams, television advertising, retransmission consent and digital.
Our third quarter and 2018 year-to-date free cash flow growth as well as the robust bookings for Q4 political ad revenue will result in Nexstar exceeding our prior year guidance for average annual free cash flow of – in excess of $600 million per year for the 2018/2019 cycle.
Political was the best growth category among our third quarter ad supported revenue streams, as political ad revenue rose almost tenfold year-over-year to approximately seventy $70.1 million, reflecting our presence in states with high levels of political spending activity, 2018 third quarter political revenue significantly outpaced our internal budgets as well as Wall Street estimates.
Obviously we have very good results plan to report on for fourth quarter, with a month-and-a-half in the books and the bulk of the political in the books. We feel very comfortable with our increased guidance, which obviously all of that increase comes from the 2018 piece of the 2018/2019 calculus. And as I said, when we report on fourth quarter in early 2019, we will also issue our first look at 2019/2020 guidance for free cash flow.”
We’re going to have crazy elections. There is going to be an insane amount of spending on political advertising. I don’t know who is going to win the election, but I know who’s going to win – me – with the money I make on NXST.
I am HUGE!
$$$MR. MARKET$$$
Our country has become a media circus. No one approves of it, but we might as well make money off of it. There is already talk of billions of dollars of ad revenue that is going to be spent on politics alone. It’s crazy, yes, but I might as well make money off of it.
Today I bought stock in Nexstar Media Group (NXST) at 91.39. I will sell it in 4 to 6 weeks at 105.56. Here’s why I like NXST:
It all starts with the chart. The reason why this stock is going up is because it’s got a good story to tell and we haven’t reached the end of the book:
This stock is up 24% in the last 12 months, however most of that climb has occurred in the last 2 months alone. What is especially interesting is that the stock is trading at a P/E of only 7 while paying a 2% dividend. In essence, we have a growth stock trading at the multiple of a value stock. It’s like going to Spag’s to buy a stock.
Nexstar Media Group, Inc. is one of the world’s leading diversified media companies and is headquartered in Irving, Texas, right next to Jerry World. In June 2018, Nexstar marked 22 years of excellence in local programming and service since Perry A. Sook, Chairman, President and CEO, founded the Company. Upon completion of its $4.6 billion acquisition of Media General in January 2017, Nexstar Broadcasting Group, Inc. was re-named Nexstar Media Group, Inc. The Company is now one of the largest broadcast groups in the United States in terms of the number of owned or operated television stations /markets and expected total annual revenue.
Nexstar owns, operates, programs or provides sales and other services to 174 television stations and their related low power and digital multicast signals reaching 100 markets or approximately 38.7% of all U.S. television households. In 2015, (and prior to the acquisition of Media General), Nexstar generated record net revenue of $896 million, broadcast cash flow of $350 million, adjusted EBITDA of $305 million and free cash flow of $208 million. That’s right, this company has TV stations that get to 40 percent of the country, that’s #2 in the country. This is a company with over $2 billion in revenue and $3.8 billion market cap. We’re not fooling around here.
Nexstar, with its 9000 employess, leverages localism to bring services and value to consumers and advertisers through its television, digital and mobile media platforms. Nexstar’s portfolio includes all primary major network affiliates, including ABC, CBS, NBC, Fox and The CW, as well as multicast affiliates Telemundo, Me-TV, Bounce TV and more. Remember, local ads are still big business and Nexstar produced over 200,000 hours of local content last year. You don’t have to sell million dollar super bowl spots to make ad revenue. I watch local news, do you? The local pet store and car dealer always take out TV ads. This company has media outlets in six Top 25 markets and twenty Top 50 markets. In summary, it is one of the nation’s largest providers of local news, lifestyle, sports and network programming. They are #1 or #2 viewership share ranking in 76% of markets. They have stable core advertising revenue and growing political advertising revenue.
NXST completed the transformative acquisition of Media General (NYSE: MEG) for $4.6 bn in 1Q17 which Increased broadcast portfolio by approx. two thirds and more than doubled revenue and adjusted EBITDA. With higher net income, expected to generate FCF over $615 mm in the 2018/2019 cycle. The company has reduced total net debt by ~$670 mm since the MEG transaction close. As a show of confidence in this company, they have increased their cash dividend 25% to $1.50 annually in 2018, marking the fifth annual consecutive increase.
This company has disciplined, market-tested management team with history of operational excellence and deep leadership bench, most of whom have at least 20 years of industry experience. Nexstar has the financial strength and flexibility to pursue additional select accretive acquisitions.
Here’s why I really love this company. Everyone is talking about how cable is dead and how Netflix is taking over. I don’t even know how Netflix works. According to Goldman Sachs, the disparity between Netflix subscriber growth (+22 mm) and cord cutting (-3 mn) indicates that Netflix has been a supplement, rather than a replacement, to subscription pay TV services. This is a thoughtful analysis as it looks like people are just adding on Netflix as another source of entertainment, rather than a substitute for what they have. As a result, the largest ad market globally, the TV ad-revenue stream, has remained stable. U.S. TV station advertising revenue (core + political) is projected to grow at a compound annual rate of 2.4% (2017 – 2022) and with it, will be NXST’s profits!
Management raised 2018/2019 average annual FCF guidance in 3Q18 as a results of higher-than anticipated political revenues generated during the 2018 mid-term election cycle. It’s just going to get more and more crazy. Trust me on this one.
The value of this investment is incredible. With a PE ratio of 7, this level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 17.7. If we focus on the long-term PE trend, Nexstar Media’s current PE level puts it below its midpoint over the past five years. Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 29.7. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers. Meanwhile, the company’s recent earnings estimates from ANAL-ysts have been trending higher.
Here’s what the CEO, Perry Sook, had to say:
“Nexstar delivered another period of consensus beating growth across every one of our cash flow metrics including 38% year-over-year growth in free cash flow on what is essentially a same station comparison. Our record results were driven by strength in three revenue streams, television advertising, retransmission consent and digital.
Our third quarter and 2018 year-to-date free cash flow growth as well as the robust bookings for Q4 political ad revenue will result in Nexstar exceeding our prior year guidance for average annual free cash flow of – in excess of $600 million per year for the 2018/2019 cycle.
Political was the best growth category among our third quarter ad supported revenue streams, as political ad revenue rose almost tenfold year-over-year to approximately seventy $70.1 million, reflecting our presence in states with high levels of political spending activity, 2018 third quarter political revenue significantly outpaced our internal budgets as well as Wall Street estimates.
Obviously we have very good results plan to report on for fourth quarter, with a month-and-a-half in the books and the bulk of the political in the books. We feel very comfortable with our increased guidance, which obviously all of that increase comes from the 2018 piece of the 2018/2019 calculus. And as I said, when we report on fourth quarter in early 2019, we will also issue our first look at 2019/2020 guidance for free cash flow.”
We’re going to have crazy elections. There is going to be an insane amount of spending on political advertising. I don’t know who is going to win the election, but I know who’s going to win – me – with the money I make on NXST.
I am HUGE!
$$$MR. MARKET$$$
My guess is that NXST hits 100 within a week, and hits the target within two.
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