Soaring Earnings Estimates Signal Upside For Nexstar (NXST) Stock

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NOTexstar Broadcasting Group (NXST) could be a solid addition to your portfolio given a notable revision to the company’s earnings estimates. Although the stock has been gaining lately, the trend may continue as its earnings outlook continues to improve.

The upward trend in estimate revisions for the broadcaster reflects growing analyst optimism about its earnings outlook, which should be reflected in its share price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements. Our stock rating tool – the Zacks Ranking – has this idea at its heart.

The five-tier Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally audited track record of outperformance, with stocks ranked Zacks #1 generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year rose significantly for Nexstar as there was strong agreement among analysts covering to raise estimates.

The chart below shows the evolution of the Zacks Consensus forward EPS estimate over 12 months:

12 month EPS

Revisions to current quarter estimates

The earnings estimate of $5.46 per share for the current quarter represents a change of +21.06% compared to the figure published a year ago.

Over the past 30 days, the Zacks Consensus Estimate for Nexstar has increased by 18.7% as an estimate has risen relative to no negative reviews.

Revisions to estimates for the current year

The company is expected to earn $25.90 per share for the full year, which represents a change of +36.46% from the previous year.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Nexstar. Over the past month, two estimates have risen from no negative revisions, allowing the consensus estimate to rise 5.37%.

Favorable ranking of Zacks

Promising rating revisions helped Nexstar earn a #1 Zacks rank (Strong Buy). The Zacks Ranking is a proven scoring tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Conclusion

Although strong revisions to estimates for Nexstar have attracted decent investment and pushed the stock up 5.6% over the past four weeks, there is still a chance the stock could still stay higher. So you can consider adding it to your portfolio right away.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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