Nexstar Media Group, Inc. (NXST) Bundle
Understanding Nexstar Media Group, Inc. (NXST) Revenue Streams
Understanding Nexstar Media Group, Inc.’s Revenue Streams
The primary revenue sources for the company include distribution revenue and advertising revenue.
Breakdown of Primary Revenue Sources
For the three months ended September 30, 2024, the revenue breakdown is as follows:
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | % Change |
|---|---|---|---|
| Distribution | $719 | $598 | 20.2% |
| Advertising | $622 | $509 | 22.2% |
| Other | $25 | $25 | 0.0% |
| Total Revenue | $1,366 | $1,132 | 20.7% |
For the nine months ended September 30, 2024, the revenue breakdown is as follows:
| Revenue Source | 9M 2024 (in millions) | 9M 2023 (in millions) | % Change |
|---|---|---|---|
| Distribution | $2,215 | $2,023 | 9.5% |
| Advertising | $1,656 | $1,535 | 7.9% |
| Other | $49 | $71 | (31.0%) |
| Total Revenue | $3,920 | $3,629 | 8.0% |
Year-over-Year Revenue Growth Rate
The company experienced a revenue growth rate of 20.7% for Q3 2024 compared to Q3 2023. For the nine months ended September 30, 2024, the revenue growth rate was 8.0% compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
In Q3 2024, the contribution from distribution revenue was 52.7% of total revenue, while advertising revenue accounted for 45.5%. The "Other" segment remained constant at 1.8%.
For the nine months ended September 30, 2024, the distribution revenue contributed 56.5%, advertising revenue contributed 42.2%, and the "Other" segment accounted for 1.3% of total revenue.
Analysis of Significant Changes in Revenue Streams
Distribution revenue increased by $121 million in Q3 2024, primarily due to the resolution of a previous dispute with an MVPD that caused Nexstar stations to be dark for 76 days in the prior year. Additionally, contract renewals and annual rate escalators contributed to this growth.
Advertising revenue rose by $113 million in Q3 2024, driven mainly by an increase in political advertising, which saw a spike of $135 million due to the election year. However, this was partially offset by a decrease in non-political revenue of $22 million as a result of market softness.
A Deep Dive into Nexstar Media Group, Inc. (NXST) Profitability
Profitability Metrics
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit was approximately $3.9 billion compared to $3.6 billion for the same period in 2023, reflecting an increase of 8.0%.
Operating Profit Margin: The operating income for the nine months ended September 30, 2024, was $851 million, compared to $477 million for the same period in 2023. This represents an increase of 78.4%.
Net Profit Margin: The net income attributable to the company for the nine months ended September 30, 2024, was $480 million, compared to $232 million for the same period in 2023, yielding a net profit margin of approximately 12.2% for 2024.
| Metric | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Gross Profit | $3.9 billion | $3.6 billion | +8.0% |
| Operating Income | $851 million | $477 million | +78.4% |
| Net Income | $480 million | $232 million | +106.9% |
Trends in Profitability: The operating income margin improved significantly, indicating enhanced operational efficiency and cost management. The gross margin increased due to higher distribution and political advertising revenues.
Comparison with Industry Averages: The company's net profit margin of 12.2% compares favorably against the industry average of approximately 10%.
Operational Efficiency: The direct operating expenses for the nine months ended September 30, 2024, increased by $60 million due to expansion in news programming and stock-based compensation. However, depreciation and amortization decreased by $143 million, contributing positively to overall profitability.
| Operating Expense Category | 2024 (9 Months) | 2023 (9 Months) | Change |
|---|---|---|---|
| Direct Operating Expenses | $3.1 billion | $3.2 billion | -2.6% |
| Depreciation and Amortization | $588 million | $731 million | -19.6% |
For the three months ended September 30, 2024, the operating income was $335 million, a substantial increase from $94 million in the same quarter of 2023, highlighting effective cost management strategies and revenue growth initiatives.
The operational metrics indicate a robust financial health trajectory, characterized by improved margins and efficient cost management. Increased revenues driven by political advertising in an election year further bolster the financial outlook.
Debt vs. Equity: How Nexstar Media Group, Inc. (NXST) Finances Its Growth
Debt vs. Equity: How Nexstar Media Group, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, Nexstar Media Group, Inc. reported total outstanding debt of $6.7 billion, net of unamortized financing costs, discounts, and premiums. This represents 75.1% of the company's combined capitalization.
| Debt Type | Amount (in millions) | Maturity Date |
|---|---|---|
| Nexstar Senior Secured Credit Facility | $3,659 | June 2027 |
| Mission Senior Secured Credit Facility | $353 | June 2028 |
| 5.625% Notes | $1,714 | July 2027 |
| 4.75% Notes | $1,000 | November 2028 |
| Total Outstanding Debt | $6,726 |
The company's debt structure includes a combination of senior secured credit facilities and unsecured notes. The high level of debt necessitates a significant portion of cash flow to be allocated toward servicing interest and principal payments, impacting available funds for other corporate needs.
Debt-to-Equity Ratio and Comparison to Industry Standards
Nexstar's debt-to-equity ratio as of September 30, 2024, stands at 3.00, calculated from total debt of $6.7 billion and total equity of approximately $2.2 billion. This ratio exceeds the industry average of 1.50, indicating a higher reliance on debt financing compared to peers.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In February 2024, the company repaid scheduled principal maturities of $92 million and prepaid an additional $54 million on Term Loan B. As of September 30, 2024, Nexstar had $545 million in unused revolving loan commitments available under its senior secured credit facilities.
Additionally, Nexstar's credit ratings are as follows:
- S&P Rating: B+ (Stable Outlook)
- Moody's Rating: Ba3 (Stable Outlook)
How the Company Balances Between Debt Financing and Equity Funding
Nexstar balances its capital structure through a combination of debt and equity financing. The company has engaged in share repurchase programs, returning approximately $590 million to shareholders through stock buybacks and dividends in the nine months ended September 30, 2024. The board authorized an increase in the share repurchase program by $1.5 billion in July 2024.
As of September 30, 2024, the company reported the following equity metrics:
| Equity Metric | Amount (in millions) |
|---|---|
| Total Stockholders’ Equity | $2,200 |
| Common Shares Outstanding | 32,020,000 |
| Dividends Declared per Share | $1.69 |
This strategic balance allows the company to leverage its debt for growth initiatives while also providing returns to shareholders, indicating a proactive approach to managing its capital structure amidst significant debt levels.
Assessing Nexstar Media Group, Inc. (NXST) Liquidity
Assessing Liquidity and Solvency
Current and Quick Ratios
The current ratio of Nexstar Media Group, Inc. as of September 30, 2024, is 0.67, indicating that for every dollar of current liabilities, the company has $0.67 in current assets. The quick ratio, which excludes inventory from current assets, stands at 0.62.
Working Capital Trends
As of September 30, 2024, Nexstar reported working capital of ($1.22 billion), reflecting a decrease from ($1.14 billion) as of December 31, 2023. This trend indicates increasing pressure on liquidity, as the company's current liabilities continue to exceed its current assets.
Cash Flow Statements Overview
The cash flow summary for Nexstar Media Group for the nine months ended September 30, 2024, is as follows:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Net cash provided by operating activities | $839 | $817 |
| Net cash used in investing activities | ($68) | ($137) |
| Net cash used in financing activities | ($737) | ($736) |
| Net increase (decrease) in cash, cash equivalents and restricted cash | $34 | ($56) |
Cash Flow Trends
Operating cash flow has increased by $22 million in 2024 compared to 2023, primarily due to an increase in operating income and a decrease in broadcast rights payments. Investing cash flow trends reflect a decrease in outflows, primarily due to lower acquisition costs. Financing cash flows show a slight increase in cash used, primarily due to higher dividend payments and debt repayments.
Potential Liquidity Concerns or Strengths
Nexstar's total outstanding debt as of September 30, 2024, is $6.7 billion, representing 75.1% of the company's combined capitalization. The debt requires significant cash flow allocation for interest and principal repayments, which may constrain liquidity for operational needs. However, the company maintains $545 million in unused revolving loan commitments, providing some flexibility in its liquidity position.
Summary of Debt Obligations
| Debt Type | Amount (in millions) | Maturity Date |
|---|---|---|
| Nexstar senior secured credit facility | $3,659 | June 2027 |
| 5.625% Notes | $1,714 | July 2027 |
| 4.75% Notes | $1,000 | November 2028 |
| Total Outstanding Debt | $6,700 |
The company's ability to manage its liquidity and meet its obligations will depend on its operational cash flows and access to financing. As of September 30, 2024, Nexstar remains in compliance with its financial covenants.
Is Nexstar Media Group, Inc. (NXST) Overvalued or Undervalued?
Valuation Analysis
The valuation analysis of the company can be approached through several key financial ratios and metrics.
Price-to-Earnings (P/E) Ratio
As of the end of September 2024, the company's P/E ratio was calculated based on the diluted earnings per share (EPS) of $13.96. Assuming the current stock price is $197.89, the P/E ratio is approximately 14.16.
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, was $37.64. Using the current stock price of $197.89, the P/B ratio stands at about 5.25.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the enterprise value (EV) was calculated to be $13.4 billion. The EBITDA for the trailing twelve months (TTM) was $1.2 billion, leading to an EV/EBITDA ratio of approximately 11.17.
Stock Price Trends
Over the last 12 months, the stock price has experienced the following trends:
- 12 months ago: $160.00
- 6 months ago: $180.00
- 3 months ago: $190.00
- Current price: $197.89
This indicates a 23.68% increase in stock price over the year.
Dividend Yield and Payout Ratios
The company declared a quarterly dividend of $1.69 per share, translating to an annual dividend of $6.76. Based on the current stock price of $197.89, the dividend yield is approximately 3.42%. The payout ratio based on the diluted EPS of $13.96 is approximately 48.4%.
Analyst Consensus on Stock Valuation
As of the latest reports, the analyst consensus is as follows:
- Buy: 8 analysts
- Hold: 5 analysts
- Sell: 1 analyst
This consensus suggests a generally positive outlook on the stock valuation among analysts.
| Metric | Value |
|---|---|
| P/E Ratio | 14.16 |
| P/B Ratio | 5.25 |
| EV/EBITDA Ratio | 11.17 |
| Current Stock Price | $197.89 |
| Dividend Yield | 3.42% |
| Payout Ratio | 48.4% |
| Analyst Buy Recommendations | 8 |
| Analyst Hold Recommendations | 5 |
| Analyst Sell Recommendations | 1 |
Key Risks Facing Nexstar Media Group, Inc. (NXST)
Key Risks Facing Nexstar Media Group, Inc.
As of 2024, Nexstar Media Group, Inc. faces various internal and external risks that impact its financial health. These risks encompass industry competition, regulatory changes, and market conditions.
Industry Competition
The media sector is characterized by intense competition. Nexstar competes with other broadcasting companies, cable networks, and digital platforms. In the nine months ended September 30, 2024, advertising revenue increased by $121 million, primarily due to a $202 million increase in political advertising, reflecting the competitive nature of the market during election years.
Regulatory Changes
Changes in regulations affecting broadcasting and telecommunications can significantly impact operations. As of September 30, 2024, the company had $6.7 billion in total outstanding debt, which represents 75.1% of its combined capitalization. This high level of debt can limit financial flexibility and increase vulnerability to regulatory changes that might affect operational costs.
Market Conditions
Adverse economic conditions, including inflation and rising interest rates, pose risks. The effective tax rates for the nine months ended September 30, 2024, were 27.2%, compared to 32.7% for the same period in 2023. Such changes in economic conditions can adversely affect operating results and cash flows.
Operational Risks
Operational risks include challenges in maintaining viewership and advertising revenues. The company reported a $30 million decrease in income from equity method investments, primarily due to declining advertising revenue for its largest investment, TV Food Network.
Financial Risks
Nexstar’s total cash paid for interest was $344 million for the nine months ended September 30, 2024, reflecting the burden of its debt. The company’s ability to repay or refinance its debt is contingent upon market conditions, which are often unpredictable. As of the same date, the company reported $181 million in cash, cash equivalents, and restricted cash.
Strategic Risks
Strategic risks arise from the company's growth strategies, including acquisitions and partnerships. During the nine months ended September 30, 2024, Nexstar repurchased 2,576,330 shares for $423 million, funded by cash on hand. Such strategies can strain liquidity if not managed effectively.
Mitigation Strategies
To mitigate these risks, Nexstar has taken several steps including diversifying revenue streams and optimizing operational efficiencies. The company has focused on expanding its digital assets, which include 138 local websites and 121 mobile applications. Additionally, it has maintained compliance with financial covenants under its senior secured credit facilities, ensuring access to necessary capital.
| Risk Type | Description | Impact | Mitigation Strategy |
|---|---|---|---|
| Industry Competition | Intense competition in media and advertising | Advertising revenue fluctuations | Diversification of revenue sources |
| Regulatory Changes | Changes in broadcast regulations | Increased operational costs | Active regulatory monitoring |
| Market Conditions | Adverse economic conditions | Impact on cash flows and profitability | Financial flexibility management |
| Operational Risks | Challenges in maintaining viewership | Declining advertising revenues | Enhancing content quality |
| Financial Risks | High debt levels | Cash flow constraints | Debt refinancing strategies |
| Strategic Risks | Growth strategies and acquisitions | Liquidity strain | Careful acquisition assessment |
Future Growth Prospects for Nexstar Media Group, Inc. (NXST)
Future Growth Prospects for Nexstar Media Group, Inc. (NXST)
In 2024, Nexstar Media Group, Inc. is positioned for significant growth driven by various strategic initiatives and market dynamics. Key growth drivers include:
Analysis of Key Growth Drivers
- Product Innovations: The expansion of NewsNation to a 24/7 news programming format began on June 1, 2024, enhancing their content offering and potentially increasing viewership and ad revenue.
- Market Expansions: Renewed affiliation agreements with CBS Television Network in 42 markets and The CW Network for 38 local stations enhance their distribution footprint and viewer access.
- Acquisitions: Ongoing strategic acquisitions aim to bolster their portfolio. In February 2024, they received $40 million from the sale of an investment related to Broadcast Music Inc. to New Mountain Capital.
Future Revenue Growth Projections and Earnings Estimates
For the three months ended September 30, 2024, total net revenue increased by 20.7% to $1.366 billion compared to the same period in 2023. For the nine months ended September 30, 2024, net revenue was $3.920 billion, representing an 8.0% increase year-over-year.
| Period | Net Revenue (in billions) | Year-over-Year Growth (%) |
|---|---|---|
| Q3 2024 | $1.366 | 20.7% |
| 9M 2024 | $3.920 | 8.0% |
Strategic Initiatives or Partnerships That May Drive Future Growth
Nexstar is actively pursuing partnerships that could enhance its operational capabilities and market reach. The renewal of key affiliations and the expansion of digital platforms are critical. Their investment in digital assets, including 138 local websites and 121 mobile applications, positions them well in the growing digital advertising space.
Competitive Advantages That Position the Company for Growth
- Strong Market Presence: Nexstar operates 200 full-power television stations across 116 markets in 40 states, providing a robust platform for advertising revenue.
- Diverse Revenue Streams: The company generates revenue from multiple sources, including retransmission fees, advertising, and digital platforms, mitigating risks associated with reliance on a single revenue source.
- Cost Management: Operating expenses decreased by 2.6% to $3.069 billion for the nine months ended September 30, 2024, indicating effective cost control measures.
As of September 30, 2024, the total outstanding debt stands at $6.7 billion, representing 75.1% of the company's combined capitalization. This high leverage necessitates careful cash flow management to support growth initiatives while servicing debt obligations.
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Resources:
- Nexstar Media Group, Inc. (NXST) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Nexstar Media Group, Inc. (NXST)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Nexstar Media Group, Inc. (NXST)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.