Nexstar Media Group's Earnings Growth vs. Shareholder Returns: A Tale of Two Trajectories

Ladies and gentlemen, buckle up! We're diving into the world of Nexstar Media Group (NASDAQ:NXST), a company that's been making waves in the media industry. Over the past five years, Nexstar Media Group has seen its share price soar by a staggering 183%! That's right, folks—183%! But here's the kicker: while the share price has been on a tear, the company's earnings growth has actually outpaced it. Let's break it down!

First things first, let's talk about earnings growth. Nexstar Media Group has achieved a compound annual growth rate (CAGR) of 36% in earnings per share (EPS) over the past five years. That's impressive, right? But here's where it gets interesting: the yearly share price gain over the same period was only 23%. So, why the discrepancy? Well, it seems the market isn't as enthusiastic about the stock as it once was. The company's price-to-earnings (P/E) ratio is a fairly low 7.69, indicating that investors might be valuing the stock more conservatively despite its strong earnings performance.

Now, let's talk about total shareholder return (TSR). Over the last five years, Nexstar Media Group's TSR was 228%, significantly higher than the share price return. This discrepancy is largely due to the company's dividend payments. Nexstar Media Group pays an annual dividend of $7.44, resulting in a dividend yield of 4.20%. The dividend growth rate year-over-year is 20.73%, and the company has a history of 10 years of dividend growth. That's a lot of cash flowing back into shareholders' pockets!



But here's the million-dollar question: How sustainable are these factors in the long term? Let's dive into the key drivers behind Nexstar Media Group's strong shareholder returns and see if they can keep the momentum going.

1. Share Price Appreciation: Over the last five years, Nexstar Media Group's share price has soared by 183%. That's a remarkable performance, folks! Additionally, the stock has seen an 18% increase in about a month, indicating strong short-term performance as well.

2. Earnings Growth: The company has achieved compound earnings per share (EPS) growth of 36% per year over the past five years. This impressive EPS growth is more substantial than the yearly share price gain of 23% over the same period. The EPS growth reflects the company's ability to generate increasing profits, which is a key driver of shareholder returns.

3. Dividend Payments: Nexstar Media Group has a strong dividend policy, paying an annual dividend of $7.44, which amounts to a dividend yield of 4.20%. The total shareholder return (TSR) over the last five years was 228%, which is better than the share price return mentioned above. This is largely a result of its dividend payments. The dividend growth rate year-over-year is 20.73%, and the company has a history of 10 years of dividend growth, indicating a commitment to returning value to shareholders.

4. Financial Efficiency: The company's return on equity (ROE) is 29.82%, and its return on invested capital (ROIC) is 8.94%. These metrics indicate that Nexstar Media Group is efficiently using its capital to generate profits, which contributes to its strong shareholder returns.

5. Analyst Consensus: The average price target for NXST is $208.43, which is 17.76% higher than the current price. The consensus rating is "Strong Buy," suggesting that analysts are optimistic about the company's future performance.



But let's not get too carried away. While Nexstar Media Group has delivered strong shareholder returns in the past, the sustainability of these factors in the long term is uncertain. The company will need to address potential challenges related to earnings growth, revenue growth, and debt levels to maintain its strong performance.

So, what's the bottom line? Nexstar Media Group has been a powerhouse in the media industry, delivering impressive shareholder returns and strong earnings growth. But as with any investment, it's crucial to stay vigilant and keep an eye on the company's performance. The market is a fickle beast, and what goes up can always come down. So, stay tuned, folks—this story is far from over!