Evaluating Nexstar After ABC Preempts Jimmy Kimmel Live and Shares Dip 5% This Week

Thinking about what to do with Nexstar Media Group stock? You are not alone. After all, the company has caught more than a few headlines and, depending on your time horizon, the numbers either look a bit choppy or impressively strong. Over just the last week, Nexstar shares slipped 5.3%, and they are down about 3.3% in the past month. However, zooming out tells a different story: returns of 24.2% year-to-date and 156.0% over the past five years indicate substantial long-term growth.

The recent turbulence may feel unsettling, but much of it connects to a series of headline-grabbing events. In the past couple of weeks, Nexstar and Disney have been in the spotlight amid ongoing controversy with "Jimmy Kimmel Live!" and ABC affiliates. Nexstar took the initiative by choosing to preempt the show, sparking conversations about programming and advertiser impact. The company has also signaled it is in productive talks to find a resolution. That combination of risk and opportunity tends to attract both cautious and optimistic investors.

So, how does all this fit with the stock’s current valuation? Based on six widely used valuation checks, Nexstar earns a 5 out of 6 on the value score, which suggests the stock is undervalued by most common measures. Of course, those numbers only tell part of the story. Next, we will break down exactly how that valuation score is built and hint at an even more insightful way to think about Nexstar’s true worth before you make your next move.

Nexstar Media Group delivered 24.0% returns over the last year. See how this stacks up to the rest of the Media industry.

Approach 1: Nexstar Media Group Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to their value today. This makes it a popular tool for understanding what a business is worth independently of market fluctuations.

For Nexstar Media Group, the model starts with the company's strong current Free Cash Flow of $1.23 Billion and analyzes how this cash generation might evolve in the coming years. Analyst estimates indicate annual cash flows remain above $1 Billion, with a projected Free Cash Flow of approximately $1.10 Billion in 2028. While direct analyst forecasts only extend a few years, projections for up to a decade are extrapolated using reasonable assumptions and supported by recent growth trends.

According to this two-stage DCF model, the estimated intrinsic value per share is $646.91. With Nexstar's current market price sitting at a substantial 69.4% discount to this value, the model strongly suggests that the stock is currently significantly undervalued.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Nexstar Media Group.

Our Discounted Cash Flow (DCF) analysis suggests Nexstar Media Group is undervalued by 69.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Nexstar Media Group Price vs Earnings

The Price-to-Earnings (PE) ratio is a preferred valuation tool for profitable companies because it directly links a company's share price to its earnings. For investors, this helps gauge whether the market is paying too much, too little, or just about right for the company's future earnings potential.

Growth expectations and the risks surrounding a business play a big role in what a “normal” or “fair” PE should look like. Businesses growing fast and taking on little risk tend to command higher PE ratios, while slower-growing or riskier companies trade at lower multiples to reflect market caution.

Nexstar Media Group's current PE ratio is 9.9x, which is noticeably lower than the industry average of 20.4x and just under the average of its peers at 10.9x. On the surface, this could indicate that the market is undervaluing Nexstar’s future profit potential.

However, Simply Wall St’s proprietary “Fair Ratio” model goes a step further. Unlike straight comparisons to peers or industry averages, the Fair Ratio (here, 18.7x) factors in Nexstar’s own growth outlook, profit margins, industry trends, market cap, and even company-specific risks. This offers a more tailored benchmark by reflecting what a rational long-term investor would pay for Nexstar. It does not just compare against competitors or the market as it stands today.

Comparing the Fair Ratio of 18.7x with Nexstar's actual PE of 9.9x reveals a substantial gap. This implies that, relative to its earnings outlook and risk profile, the stock is currently undervalued based on this preferred multiple approach.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Nexstar Media Group Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story or perspective about a company that links the underlying business outlook with financial forecasts, connecting what you believe about a company’s future performance, such as revenue, earnings, and margins, to what you judge its fair value should be.

Narratives make investing more flexible and intuitive by letting you customize your assumptions based on what you think truly matters, not just what the numbers say today. On Simply Wall St’s Community page, millions of investors are already building and sharing their own Narratives for companies like Nexstar Media Group, so you can see a range of perspectives in one place.

By updating automatically with new information, Narratives allow you to quickly compare your fair value estimates against the current share price and decide when you might want to buy, hold, or sell. For example, one investor might set a Narrative around robust digital ad growth and assign Nexstar a fair value of $250, while another, more cautious about declining TV audiences, places fair value closer to $190. This demonstrates how different viewpoints can lead to different decisions.

Do you think there's more to the story for Nexstar Media Group? Create your own Narrative to let the Community know!

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.

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