Nexstar Media and ASGN have been highlighted as Zacks Bull and Bear of the Day

For Immediate Release

Chicago, IL – May 16, 2024 – Zacks Equity Research shares Nexstar Media Group NXST as the Bull of the Day and ASGN ASGN as the Bear of the Day. In addition, Zacks Equity Research provides analysis on The Western Union Company WU, Frontline plc FRO and Organon & Co. OGN.

Here is a synopsis of all five stocks.

Bull of the Day:

The Zacks Broadcast Radio and Television Industry is currently in the top 20% of over 250 Zacks industries and Nexstar Media Group is one of the dominant companies to invest in.

As the largest television station owner in the United States, Nexstar’s network affiliates include the four major networks of NBC, CBS, ABC, and FOX along with owning The CW which is America’s fifth major broadcast network.

Landing Nexstar’s stock a Zacks Rank #1 (Strong Buy) and the Bull of the Day is that earnings estimate revisions have ticked up after the media giant crushed its first quarter earnings expectations last Thursday.

Q1 Earnings Beat: Nexstar’s massive earnings potential should be catching investors' attention after posting Q1 EPS of $5.16 which beat the Zacks Consensus of $4.28 a share by 20%.

Furthermore, Q1 earnings soared 73% from $2.97 per share in the comparative quarter. Notably, Nexstar delivered record sales for the first quarter at $1.28 billion which increased 2% year over year and was roughly on par with estimates.

Soaring EPS Estimates: Indicative of now being a good time to buy Nexstar’s stock is that EPS estimates for fiscal 2024 have spiked 4% in the last week from projections of $26.73 a share to $27.82 per share.

This would be an 188% increase from EPS of $9.64 in 2023 and while FY25 earnings are expected to dip to $19.64 per share estimates have climbed 8% from projections of $18.19 a share seven days ago.

Value to Shareholders

Dividend: Magnifying Nexstar’s immense profitability and separating its stock from other companies that primarily focus on growth and don’t offer or have a significant payout to shareholders is that NXST has a 3.76% annual dividend yield.

Better still, Nexstar has increased its payout in each of the last five years for an annualized dividend growth rate of 31.49% during this period. Nexstar’s 57% payout ratio also suggests there may be room for more dividend hikes in the future.

Return on Equity: Further illustrating Nexstar’s value to shareholders is a 17% trailing twelve-month ROE which has impressively topped its industry’s 0.33% and is closer to the S&P 500’s 25% average.

P/E Valuation: With rising EPS estimates offering further support, it’s also noteworthy that NXST trades at just 6.7X forward earnings which is a significant discount to the industry average of 26.8X and Fox at 10.1X.

Tracking Nexstar’s Total Return Performance

Proving to be a viable investment, Nexstar’s total return (including dividends) over the last five years is +83% which has largely outperformed the Zacks Broadcasting-Radio and TV Market’s +13% and is near the S&P 500’s +103%.

Bottom Line

After exceeding lofty earnings expectations for the first quarter, Nexstar’s stock looks very promising in terms of growth and offers sound value to investors at its current levels.

Bear of the Day:

The increased need for online marketing and sales following the pandemic led to higher demand for IT services but the frenzy is beginning to slow and it may be time to sell ASGN’s stock.

As an integrated critical IT solutions provider that offers professional staffing, ASGN’s stock lands a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

Time to Take Profits

Making it more apparent to sell is that ASGN’s stock has soared +60% over the last year and now may be a good time to take profits as earnings estimate revisions have continued to decline.

Notably, fiscal 2024 earnings estimates are now down -9% in the last 60 days while FY25 EPS estimates have dropped -10%.

Valuation & Growth Risk

Trading at $102, ASGN’s stock still trades at a reasonable 18.9X forward earnings multiple but when considering the company’s long-term growth rate there are some concerns. In this regard, ASGN has a PEG ratio of 7.7 which is uncomfortably above the optimum level of 1 or less and its industry average of 2.7.

To that point, there are a number of faster-growing IT solutions providers in the space that have more diverse business offerings including Dell Technologies with a PEG of 1.4 and ServiceNow at 2.1.

Bottom Line

The rally in ASGN’s stock is starting to look overdone considering the company’s subpar growth rate and the downward trend in earnings estimate revisions. Investors looking to avoid the risk of stocks that may be due for a correction will want to keep this in mind and those sitting on profits in ASGN may want to take them now.

Additional content:

Is Stagflation Round the Corner? 3 Ultra-Safe Picks

Stagflation is a scenario where price pressures remain elevated amid a cooling economy. In the 1970s, the spike in oil prices propelled inflation to a double-digit rise, while GDP growth was relatively flat, leading to stagflation in the economy.

However, to compare the 1970s with the present economic situation must be an over-the-top expectation. But a small bout of stagflation is likely since an increase in prices of indispensable commodities and services came in hotter than expected. At the same time, the economy expanded at the slowest pace in the first quarter of the two years.

Wholesale prices scaled upward in April, a tell-tale sign that it might take time for inflationary pressure to ebb. The producer price index (PPI) increased 0.5% last month, higher than analysts’ expectations of an increase of 0.3%, per the Bureau of Labor Statistics. Core PPI, which excludes the volatile energy and food costs, also rose 0.5% compared with an estimated gain of 0.2%.

The Federal Reserve’s favored inflation gauge has already shown that it’s an uphill task to tame stubborn price growth. The personal consumption expenditures (PCE) price index increased 2.7% in March from a year ago and came in slightly higher than anticipated. The core PCE price index increased 2.8% from a year ago and was also above our estimates.

It's worth pointing out that the GDP report of the first quarter mentioned that price pressures have been heating up for most of the year, thanks to an uptick in the cost of services, including insurance and transportation. On the other hand, the GDP for the first three months of the year increased at an annualized rate of 1.6%, much less than the 3.4% jump in the final three months of last year, and fell short of Wall Street expectations.

Amid such a gloomy economic setup, where it’s becoming difficult to downplay the idea of stagflation, astute investors should place their bets on ultra-safe stocks. After all, stagflation time and again has led to a double-digit plunge in stocks. Hence, the preferred choices are The Western Union Company, Frontline plc and Organon & Co.

This is because these stocks have a low beta (ranges from 0 to 1), making them immune to market vagaries. They also provide dividends, implying that they have a solid business model that helps them counter market upheavals. They have a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Western Union is a leader in global money transfer. The company has a beta of 0.84 and a Zacks Rank #1. Western Union has a dividend yield of 7.03%. WU’s payout ratio presently sits at 53% of earnings. Check Western Union’s dividend history here.

The Zacks Consensus Estimate for its current-year earnings has increased 4.8% over the past 60 days. The company’s expected earnings growth rate for the next five-year period is 3.8%.

Frontline is a shipping company. The company has a beta of 0.03 and a Zacks Rank #2. Frontline has a dividend yield of 5.57%. FRO’s payout ratio presently sits at 46% of earnings. Check Frontline’s dividend history here.

The Zacks Consensus Estimate for its current-year earnings has increased 10.8% over the past 60 days. The company’s expected earnings growth rate for the current year is 17.5%.

Organon is a healthcare company. The company has a beta of 0.81 and a Zacks Rank #1. Organon has a dividend yield of 5.35%. OGN’s payout ratio presently sits at 27% of earnings. Check Organon’s dividend history here.

The Zacks Consensus Estimate for its current-year earnings has increased by 3% over the past 60 days. The company’s expected earnings growth rate for the current year is 6.8%.

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The Western Union Company (WU) : Free Stock Analysis Report

Frontline PLC (FRO) : Free Stock Analysis Report

Nexstar Media Group, Inc (NXST) : Free Stock Analysis Report

ASGN Incorporated (ASGN) : Free Stock Analysis Report

Organon & Co. (OGN) : Free Stock Analysis Report

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