Here's Why We Think Nexstar Media Group (NASDAQ:NXST) Is Well Worth Watching

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. A loss-making company is yet to prove itself with profit, and eventually the inflow of external capital may dry up.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Nexstar Media Group (NASDAQ:NXST). While this doesn't necessarily speak to whether it's undervalued, the profitability of the business is enough to warrant some appreciation - especially if its growing.

View our latest analysis for Nexstar Media Group

Nexstar Media Group's Improving Profits

Nexstar Media Group has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. So it would be better to isolate the growth rate over the last year for our analysis. Nexstar Media Group's EPS skyrocketed from US$21.83 to US$27.36, in just one year; a result that's bound to bring a smile to shareholders. That's a impressive gain of 25%.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. EBIT margins for Nexstar Media Group remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 4.0% to US$5.0b. That's a real positive.

In the chart below, you can see how the company has grown earnings and revenue, over time. For finer detail, click on the image.

Fortunately, we've got access to analyst forecasts of Nexstar Media Group's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Nexstar Media Group Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$6.9b company like Nexstar Media Group. But we are reassured by the fact they have invested in the company. Notably, they have an enviable stake in the company, worth US$325m. Investors will appreciate management having this amount of skin in the game as it shows their commitment to the company's future.

Is Nexstar Media Group Worth Keeping An Eye On?

For growth investors, Nexstar Media Group's raw rate of earnings growth is a beacon in the night. This EPS growth rate is something the company should be proud of, and so it's no surprise that insiders are holding on to a considerable chunk of shares. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. Still, you should learn about the 3 warning signs we've spotted with Nexstar Media Group (including 1 which shouldn't be ignored).

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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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.