Last update on 2024-06-07

Nexstar Media Group (NXST) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Nexstar Media Group (NXST) Piotroski F-Score Analysis 2023: Scored 4 out of 9, highlighting profitability, liquidity, and efficiency insights for investors.

Short Analysis - Piotroski Score: 4

We're running Nexstar Media Group (NXST) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Nexstar Media Group (NXST) scored 4 out of 9 on the Piotroski F-Score, which measures the strength of a company's financial position. They excelled in aspects like positive net income, positive cash flow, higher operating cash flow than net income, and a reduced number of diluted shares. However, the company showed weaknesses in leverage (which has increased), a lower current ratio, a declining gross margin, and a falling asset turnover ratio. This mix of positive and negative indicators suggests a somewhat balanced but cautious financial outlook.

Insights for Value Investors Seeking Stable Income

Given the score of 4, Nexstar Media Group demonstrates moderate financial strength, showing both positive and negative traits. It has strong profitability and cash flow, but also faces challenges with leverage and operational efficiency. As an investor, it might be worth looking into Nexstar Media Group if you are prepared for some financial risks and believe in the company’s long-term strategies and potential for improvement.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Nexstar Media Group (NXST)

Company has a positive net income?

Checking if net income is positive or negative is a fundamental aspect of financial analysis. Positive net incomes indicate profitability, while negative ones suggest losses.

For the year 2023, Nexstar Media Group (NXST) reported a net income of $346,000,000, which is positive. This represents a consistent profitability performance for the company. Over the past 20 years, the company has mostly reported profits, except for a few years including 2003, 2004, 2005, 2006, 2007, 2008, 2009, and 2011. Notably, Nexstar has demonstrated substantial growth in net income in recent years, particularly from 2012 onwards. This trend is favorable for Nexstar's financial health and affirms robust earnings growth, reflecting resilience and effective business strategies.

Company has a positive cash flow?

The criterion examines if the cash flow from operations (CFO) is positive or negative, which indicates the company's ability to generate cash internally.

For the year 2023, Nexstar Media Group (NXST) has a CFO of $999,000,000. This is a positive figure, therefore we assign it 1 point for this criterion. When considering the cash flow from operations over the past 20 years, it is evident that the CFO has generally been on an upward trend, aside from several fluctuations. Notably, the CFO has dramatically increased from $3,686,000 in 2003 to nearly $1 billion in 2023. These figures suggest a significant improvement in the company's operational efficiency and ability to generate cash internally. Considering the last few years, with CFO peaking at $1.253 billion in 2020 and consistently remaining above $1 billion, it indicates strong and stable operational performance.

Return on Assets (ROA) are growing?

Explain the criterion for Nexstar Media Group (NXST) and why it is important to consider

The Return on Assets (ROA) indicates how profitable a company is relative to its total assets. A higher ROA shows that a company is more efficient at converting its investment into profit. It is crucial for assessing a company's financial health and efficiency.

Operating Cashflow are higher than Netincome?

Operating cash flow measures the cash generated from a company's regular operations, while net income represents the company's profit after all expenses and taxes. A higher cash flow than net income implies strong cash earnings.

In 2023, Nexstar Media Group's operating cash flow was $999,000,000, while its net income stood at $346,000,000. Since the operating cash flow is significantly higher than the net income, it suggests robust cash-generating efficiency in its core operations. This trend indicates a sound and potentially profitable business model. Over the last 20 years, Nexstar's operating cash flow has remarkably improved, marking an upward trajectory from just $3,686,000 in 2003 to nearly $1 billion in 2023. This strong positive cash flow relative to net income merits an addition of 1 point in the Piotroski analysis, reflecting financial strength and effective cash management.

Liquidity of Nexstar Media Group (NXST)

Leverage is declining?

Change in Leverage measures the degree to which a firm's assets are financed by debt. A decrease in leverage suggests improving financial health and lower financial risk.

The leverage ratio for Nexstar Media Group has increased from 0.5384 in 2022 to 0.5558 in 2023. This rise indicates that the company has taken on more debt relative to its equity, which may raise concerns about increased financial risk and potentially higher interest obligations. Overall, the trend is negative for this criterion, resulting in a score of 0 points for this Piotroski criterion. Historically, Nexstar Media Group's leverage was much higher in the early 2000s, even reaching over 1 in 2008-2009, indicating a period of significant financial stress during the Great Recession. The company has managed to reduce its leverage significantly since then, though the recent uptick in 2023 may be a point of concern for shareholders and analysts.

Current Ratio is growing?

The current ratio measures a company's ability to pay short-term obligations with its short-term assets. It is important because a higher ratio indicates stronger liquidity and a better capacity to meet its debt requirements.

Comparing the current ratio of Nexstar Media Group (NXST) in 2023, which is 1.5255, with its value in 2022, 1.8085, it has decreased. This is a negative trend and suggests a deterioration in the company's liquidity position. Over a 20-year span, Nexstar's current ratio fluctuated but generally stayed above the industry median, with occasional dips below. Specifically, from having a stronger position compared to the industry median of 1.7895 in 2022, Nexstar has slightly decreased to 1.5255 in 2023 while the industry median is 1.5175 in 2023. Thus, for Piotroski Analysis, Nexstar does not earn a point for this criterion as the current ratio has decreased.

Number of shares not diluted?

The change in shares outstanding is crucial as it directly impacts shareholder value and earnings per share (EPS). An increase typically dilutes equity value.

The outstanding shares for NXST have decreased from 39,349,000 in 2022 to 35,317,000 in 2023. This reduction is beneficial, as it means the EPS could potentially increase, enhancing shareholder value. In the last 20 years, the highest was 47,412,000 shares in 2016, and the lowest was 15,576,000 in 2003. The trend appears slightly inconsistent but generally beneficial in recent years. Therefore, NXST scores 1 point.

Operating of Nexstar Media Group (NXST)

Cross Margin is growing?

Gross Margin measures the percentage of revenue that exceeds the cost of goods sold. This is crucial as it indicates the efficiency of a company's production process and its ability to cover other expenses.

In 2023, Nexstar Media Group's Gross Margin is 0.5636, which marks a decrease from 0.6152 in 2022. This downward trend negatively affects the financial health of the company, as it suggests reduced efficiency or increased costs in production. Over the last 20 years, Nexstar's Gross Margin has generally been above the industry's median, but the recent decline warrants attention. Compared to the industry median of 0.4493 in 2023, Nexstar's Gross Margin still performs well, but the downward trend could signal potential challenges ahead. Thus, the score for this criterion is 0.

Asset Turnover Ratio is growing?

Asset Turnover is a financial ratio that measures the efficiency of a company's use of its assets to generate sales revenue. Higher values indicate better performance.

In 2023, the Asset Turnover for Nexstar Media Group (NXST) decreased to 0.3985 from 0.4017 in 2022. This suggests a slight decline in the efficiency with which the company is utilizing its assets to generate revenue. Historically, the company's Asset Turnover has fluctuated, with the highest value in the past 20 years being 0.5437 in 2015 and the lowest at around 0.2887 in 2019. A decline, albeit small, is a negative indicator in the Piotroski scorecard, leading to a score of 0 for this criterion. Therefore, this decreasing trend in Asset Turnover is not favorable for assessing operational efficiency.