Nexstar Media Group, Inc. (NASDAQ:NXST), is not the largest company out there, but it saw a decent share price growth of 11% on the NASDAQGS over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. But what if there is still an opportunity to buy? Let's examine Nexstar Media Group's valuation and outlook in more detail to determine if there's still a bargain opportunity.

Is Nexstar Media Group Still Cheap?

According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 12.47x is currently trading slightly below its industry peers' ratio of 13.54x, which means if you buy Nexstar Media Group today, you'd be paying a reasonable price for it. And if you believe that Nexstar Media Group should be trading at this level in the long run, then there's not much of an upside to gain over and above other industry peers. Is there another opportunity to buy low in the future? Since Nexstar Media Group's share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Nexstar Media Group?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Nexstar Media Group's earnings over the next few years are expected to increase by 71%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? NXST's optimistic future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at NXST? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio?

Are you a potential investor? If you've been keeping tabs on NXST, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for NXST, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Nexstar Media Group as a business, it's important to be aware of any risks it's facing. Our analysis shows 3 warning signs for Nexstar Media Group (1 is significant!) and we strongly recommend you look at these before investing.

If you are no longer interested in Nexstar Media Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.