Updated 3/11/2025
Nexstar Media Group is a giant in the local television broadcasting industry, owning and operating stations across the United States. Over the years, the company has expanded its reach, making it the largest local TV station owner in the country. It benefits from a strong presence in traditional broadcasting while also investing in digital media to stay relevant in a rapidly evolving industry.
For investors focused on dividend income, Nexstar offers an appealing mix of a solid yield, steady dividend growth, and strong cash flow—all key components for a successful long-term income strategy. However, like any investment, there are potential challenges, including a high debt load and reliance on cyclical advertising revenue. Let’s take a closer look at what Nexstar offers to dividend-focused investors.
📌 Key Dividend Metrics
💰 Dividend Yield: 4.40% (higher than the S&P 500 average)
💵 Annual Dividend: $7.44 per share
📈 Five-Year Dividend Growth Rate: 22.9%
📊 Payout Ratio: 31.57% (leaving room for future increases)
📅 Most Recent Dividend Payment: February 26, 2025
📉 Ex-Dividend Date: February 12, 2025
Dividend Overview
Nexstar’s current dividend yield of 4.40% is attractive, especially when compared to its five-year average yield of 2.56%. This suggests that the stock might be offering a better-than-usual income opportunity at its current price. With an annual payout of $7.44 per share, Nexstar provides a meaningful income stream for investors who prioritize dividends.
One of the biggest positives here is the payout ratio of just 31.57%. This means that Nexstar is using less than a third of its earnings to pay dividends, leaving plenty of room for future increases or reinvestment into the business. For a media company that operates in an industry with ups and downs, this conservative payout ratio is reassuring.
Dividend Growth and Safety
Dividend growth is where Nexstar really stands out. Over the past five years, the company has increased its dividend at an impressive 22.9% annual growth rate. That’s well ahead of inflation and a great sign for investors who want rising income over time.
Looking at cash flow, Nexstar generated $1.3 billion in free cash flow over the last year, more than enough to support its dividend. That kind of cash flow gives the company flexibility, even during slower revenue periods.
The only real concern here is Nexstar’s debt. With a Debt-to-Equity ratio of nearly 300%, the company is heavily leveraged. While cash flow comfortably covers interest payments, it’s something to watch, especially if revenue growth slows down.
Chart Analysis
Looking at the recent price action of Nexstar Media Group (NXST), there’s a lot going on here. The stock has seen significant volatility over the past year, with several sharp moves both up and down. The interplay between the 50-day and 200-day moving averages provides some interesting insights into the stock’s overall trend and where it might be headed.
Moving Averages and Trend
The 50-day moving average (blue line) has been trending below the 200-day moving average (purple line) for a while, signaling a period of relative weakness. This kind of setup is typically considered a bearish trend, and it reflects the stock’s struggles over the past few months. However, more recently, the 50-day moving average is starting to curl upward, suggesting a potential shift in momentum.
Right now, the stock price is moving back toward these key levels, attempting to reclaim the 200-day moving average. If NXST can sustain above this level, it could indicate a potential trend reversal, but for now, it’s still below resistance.
Volume and Market Participation
Volume is another interesting aspect of this chart. There have been multiple spikes in trading activity, especially around major price movements. One notable volume surge occurred in the second half of last year, likely driven by news or earnings-related catalysts. More recently, volume has picked up again, suggesting increased investor interest as the stock attempts to rebound from its recent lows.
Higher volume during price increases is generally a positive sign, as it indicates strong buying interest. However, if volume spikes during declines, it could suggest that sellers are still in control. The current volume trend looks more balanced, which means the market is still deciding the next major move.
Relative Strength Index (RSI) and Momentum
The RSI indicator at the bottom of the chart gives a clue about the stock’s momentum. It has been trending higher after reaching oversold levels a few months ago. This suggests that NXST has been gaining strength and could be in the early stages of a potential recovery.
That said, the RSI is not yet at an overbought level, meaning there could still be room for further upside. A push above 70 on the RSI would indicate that the stock might be getting stretched in the short term, but for now, the trend is still developing.
Recent Price Action and Key Levels
The last few trading sessions have seen NXST attempt a strong bounce, moving from its recent lows back toward the $170 range. The stock opened higher at 176.41 but ended up closing lower at 169.06, showing that sellers stepped in during the session.
Over the last five candles, there has been a mix of strong upward movement and some pullbacks, indicating that the market is still testing resistance levels. The latest candle had a long upper wick, meaning buyers initially pushed the price higher, but sellers took control before the close. This type of price action suggests some hesitation in the market.
For the stock to build on its recent gains, it needs to hold above key support levels while breaking through resistance near the moving averages. If NXST can stay above $165-$170, it could stabilize and make another run toward recent highs. However, if it fails to hold, another pullback could be in store.
Analyst Ratings
In recent months, Nexstar Media Group (NXST) has received a mix of upgrades and downgrades from analysts, showing a range of opinions on the company’s financial outlook. The overall consensus points toward a strong buy, with an average 12-month price target of approximately $210.17, suggesting an upside potential of around 18% from current levels.
🔼 Upgrades
📈 Benchmark increased its price target from $200 to $225, maintaining a buy rating. Analysts highlighted Nexstar’s strong cash flow and its ability to benefit from election-related advertising revenue, which tends to boost earnings in certain cycles.
📊 Loop Capital upgraded NXST from hold to buy and raised its price target from $190 to $200. The upgrade was based on the company’s strategic acquisitions, which have strengthened its position in the local broadcasting market and improved revenue diversification.
🔽 Downgrades
📉 StockNews.com recently changed its rating from buy to hold, pointing to near-term uncertainties in the advertising market and possible headwinds for traditional broadcast networks.
💵 Barrington Research lowered its earnings estimates for the first quarter of 2025, reducing expected earnings per share from $3.81 to $2.73. Despite this revision, they maintained an outperform rating with a $200 price target, indicating confidence in Nexstar’s long-term growth but acknowledging short-term revenue fluctuations.
The combination of upgrades and downgrades reflects the complex nature of Nexstar’s industry, with some analysts seeing strong upside potential while others remain cautious about near-term challenges.
Earnings Report Summary
Nexstar Media Group just released its latest earnings report, and there’s plenty to unpack. The company delivered record revenue for both the quarter and the full year, showing strong performance despite a few areas that missed expectations.
For the fourth quarter, Nexstar pulled in $1.49 billion in net revenue, marking a new high. A big part of that came from a surge in political ad spending and steady growth in distribution revenue. While these numbers look great, earnings per share came in at $7.56, falling short of analyst projections, which had been set higher. It suggests that while revenue growth is strong, certain costs or unexpected headwinds may have weighed on the bottom line.
On the operational side, the company reported $628 million in adjusted EBITDA for the quarter, reflecting solid performance across its business segments. For the full year, Nexstar brought in $5.4 billion in revenue, another record-breaking achievement. The company’s ability to generate cash remained strong, with $2 billion in adjusted EBITDA for the year.
Shareholders saw direct benefits as Nexstar returned $820 million through dividends and share repurchases, reducing the overall number of shares outstanding by nearly 9 percent. That’s a strong commitment to rewarding investors while also boosting earnings per share over time.
Debt reduction was another priority, with the company paying off $327 million in debt, bringing its net leverage ratio down to 2.91 times. Lower debt levels give Nexstar more flexibility for future investments and help protect against any potential slowdowns in revenue.
Looking ahead, the company gave guidance for 2025 adjusted EBITDA in the range of $1.5 billion to $1.595 billion. That forecast suggests a cautious but steady outlook, acknowledging the evolving nature of the media industry while maintaining confidence in its ability to generate solid cash flow.
Overall, Nexstar had a strong year with record revenues, solid shareholder returns, and strategic debt reduction. While the earnings per share figure didn’t quite hit the mark, the company’s financial foundation remains strong, and it’s setting itself up for continued stability in the years ahead.
Financial Health and Stability
Financially, Nexstar has some strong points but also a few concerns. On the positive side, the company maintains a profit margin of 13.35% and an operating margin of 30.13%, showing that it runs an efficient business. Earnings growth has also been robust, with a 112.3% year-over-year increase in quarterly earnings—an eye-catching number for any company, let alone one in a mature industry.
However, Nexstar’s balance sheet tells a different story. The current ratio of 1.66 indicates that it can handle short-term financial obligations, but long-term debt remains a concern. The company currently holds $6.78 billion in debt, compared to just $144 million in cash. That’s a significant gap, and while cash flow is strong, high leverage limits financial flexibility.
One bright spot is Nexstar’s Return on Equity (ROE) of 29.82%, which suggests that the company is making excellent use of shareholder capital. This is well above industry averages and reinforces Nexstar’s ability to generate profits.
Valuation and Stock Performance
Right now, Nexstar looks relatively undervalued. With a trailing P/E ratio of 7.90 and a forward P/E of 10.89, the stock trades at a discount compared to broader market averages. The PEG ratio of 1.94 indicates that some growth expectations are already baked into the price, but it doesn’t look overly expensive.
The stock has moved between $146.04 and $191.86 over the past year and currently trades at $169.06. Looking at moving averages, its 50-day average sits at $157.47, while the 200-day average is $164.51, showing some technical strength.
With a beta of 1.46, Nexstar’s stock tends to move more than the broader market. That means investors should expect some volatility, especially around earnings reports and major news events in the industry.
Risks and Considerations
- High Debt Load – Nexstar’s debt-to-equity ratio is nearly 300%, making it one of the more leveraged companies in its sector. While cash flow supports its obligations now, any downturn in revenue could make this a problem.
- Cyclical Revenue – Political ad spending plays a big role in Nexstar’s revenue, meaning earnings can be strong in election years but weaker in non-election years. This pattern can create fluctuations in financial performance.
- Industry Shifts – The traditional TV advertising market is facing long-term pressure from streaming and digital platforms. While Nexstar has made moves to adapt, the industry’s future remains uncertain.
- Stock Volatility – A beta of 1.46 suggests that the stock moves more than the overall market. While this can create buying opportunities, it’s something to consider if you prefer a steadier dividend stock.
Final Thoughts
For dividend-focused investors, Nexstar Media Group has a lot to offer. A 4.40% yield, strong dividend growth, and a low payout ratio all make it a solid choice for income seekers. The company’s ability to generate strong cash flow adds another layer of confidence that its dividend is sustainable.
That said, the high debt load and cyclical nature of its revenue mean investors should be aware of potential risks. While the company’s financials are strong now, maintaining that strength will be key.
For those comfortable with a bit of volatility and the occasional revenue fluctuation, Nexstar presents an attractive income opportunity. However, for more conservative investors who prefer low-debt companies with consistent earnings, it might require a closer look before jumping in.
Recent Comments