Unlocking Market Insights: Multiple Monday 7/7/25
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Welcome to the inaugural edition of what I am tentatively dubbing “MULTIPLE MONDAYS” at Accrued Interest. I want to make Accrued Interest a research service that provides value in MULTIPLE ways. In addition to commentary, I am debuting the first of many trackers that help you with your stock research. Please distribute these tables! I want to market my work and give subscribers a preview of some more advanced research that will eventually go behind an eventual paywall. (Subscribe to me today, as I will have discounts for early supporters!)
How I Use Valuation Multiples in My Research
When generating investment ideas, I find it helpful to create valuation trackers and update them over time. The purpose of this exercise is not to argue with Mr. Market but to observe what its price signals are telling us. Using consensus street estimates from the service Tikr, I built a tracker showing the valuation metrics for 10 diversified media and entertainment companies which I will discuss below.
Most popular, free finance websites such as Yahoo Finance give P/E ratios, but only on a trailing basis. They tend to lack my preferred valuation metric – Enterprise Value to Free Cash Flow (EV/FCF), and other KPIs. All the tables you will see here are from my custom Excel model, which I will eventually send to subscribers.
I will show you how I use these multiples to understand what investors are doing with their money. Then, I compare that to my PERSONAL analyses of these companies. These tables will not be perfect. But using these multiples like a map will improve your investing skill and better calibrate your expectations.
Now, let us begin MULTIPLE MONDAY.
How to Think About Your Target List of Companies
Here is my list of 10 media stocks I use to build my valuation table. This is not meant to be all encompassing. I wanted a manageable number, without going into micro-caps. I am calling out their leverage (net debt / 2025E EBITDA) because high debt-loads usually lower valuation multiples. I rank them from largest to smallest, because larger companies often get a premium for having a diversified revenue base.
Netflix ($NFLX) is in a category of its own as the only publicly traded, pure 100% streaming video company. It is always expensive based on traditional valuation metrics. However, I rate them Outperform because they have been best-in-class in terms of execution and I see nothing to change that. Netflix is the only streaming company to figure out how to grow profitably with a global subscriber base.
I am including Netflix in my media tracker because it is worth thinking about how much of a PREMIUM the market is giving relative to their competitors. For now, the premium is justified but I would wait for any pullback to add to the stock.
Diversified Media Conglomerates – I include Disney ($DIS), Warner Bros. Discovery ($WBD), Fox Corporation ($FOX), and Paramount Global ($PARA).
Broadcast Television – Category is self-explanatory. I included Nexstar Media Group ($NXST), Gray Media ($GTN), TEGNA ($TGNA), Sinclair ($SBGI), and E.W. Scripps Company ($SSP). Fox Corp (from above) has a large broadcast component, but I included with the larger cap media comps due to its streaming assets such as Tubi.
7/7/25 Observations on Target List
NFLX is significantly larger than all its entertainment peers, at almost double (2x) the enterprise value of DIS. I also do not think many people realize that Netflix has the lowest debt level in the industry. They could carry more debt, but I prefer this margin of safety.
Disney is the “best of the rest” of the entertainment companies, with an enterprise value almost 4x their closest peer, WBD. DIS debt level at 1.9x is among the lowest in the group.
Broadcast television companies are much smaller than their Big 4 network peers. Nexstar (NXST) is the largest of the broadcasters but still has almost HALF the enterprise value of Paramount. Broadcasters also carry significantly more debt than anyone else. This high leverage in the face of declining earnings is why I rated NXST as an Underperform.
How to use Valuation Multiples to Decode the Market’s Opinion
I build in 2 valuation metrics in this version of the tracker. Enterprise Value to FCF (EV/FCF) is my favorite valuation metric. Too many media investors want to ignore DEBT on the balance sheet and pretend their stocks are cheap. EV to FCF is not perfect, but it keeps us honest. I show Price to Adjusted EPS (P/E) for reference, but since it ignores debt, stocks with high leverage will tend to look artificially cheap. Do not make this mistake.
Now I will go section by section to explain why valuations are what they are:
Netflix trades at a premium 49x EV/FCF, which is like its 2026E P/E ratio because they have very high free cash flow margins. After years of being the poster child for unprofitable growth, NFLX is now a case study for how cash-burning enterprises can be FCF machines.
NFLX trades “expensive” because it has the best long-term growth profile of any of the media companies in this group. Their biggest competition right now is YouTube ($GOOGL, $GOOG). I would recommend owning the stock because sometimes you just have to go with the market leader. Do not overthink this!
Disney (DIS) – Trades at a premium P/E multiple, approx. 20x 2026 earnings and 18x 2027 earnings because it has a diversified earnings base with non-media assets such as theme parks and cruises. Disney should always get a premium to WBD, FOX and PARA because it has more assets not tied to the cable bundle. Note – DIS FCF multiple looks high here at 30x 2026 and 27x 2027, because investors are looking past a short-term boost in capital expenditures because it is for “experiences” – cruises and theme parks. If you were to normalize for the growth capex, I would imagine Disney’s FCF multiple would still be at a premium, but more in line with the group. DIS is a good “north star” to always compare your company’s valuation, as a point of reference. No rating today – I use Disney as a refence for other media companies.
Warner Bros. Discovery (WBD) – Trades at 13x EV/FCF for 2026 and 2027 because they have a lot of debt (3.9x leverage) and uncertain growth prospects. I rated WBD as Underperform in past write-ups because I expect new investors to wait until the company splits in two rather than invest in half the company they do not want. When we get WBD tracking stocks, we will be able to tell the multiples for the respective halves.
FOX Corporation trades at a similar EV/FCF multiple as WBD because it has a similar mix of assets tied to the traditional cable bundle. With its low leverage (0.9x) I prefer FOX to WBD, and I think the Fox News Network is the most valuable basic cable network that will always be a “must-buy” for advertisers. No rating today – will talk about Fox more in future posts.
Paramount (PARA) – With the highest leverage (4.6x) and weak free cash flow, PARA looks a bit expensive on FCF but “cheap” if you believe adjusted EPS estimates. I consider PARA also to be an Underperform, because it has most of the same issues as WBD as well as political risks with their struggle to close their merger with Skydance playing out in the press.
Nexstar Media Group (NXST) is an Underperform for me, because as the largest owner of broadcast stations they are inheriting all the industry’s problems without an escape plan. Note that using EV/FCF Nexstar is trading at 10x – 13x, not the low single-digit P/FCF multiples that some investors mistakenly use to argue it is “cheap”. With 4x leverage, there is not much room for error. The wise move for station operators is to get out of the business and SELL to Nexstar.
Gray Media (GTN) – You need to average the EV/FCF multiples for 2026 and 2027 because revenue spikes in even-numbered election years. Even adjusting for that, I do not think GTN is “cheap” enough given the 8x of debt on the balance sheet. Gray recently announced a station swap with SSP which investors are still digesting. We can discuss that deal in the coming days but do not think this game of musical chairs will be enough to save the business. Hopefully, they will sell the entire company!
Tegna (TGNA) has a more reasonable 4x leverage, but that is still high. This is another undifferentiated broadcaster that would be wise to sell-out while they can. No rating.
Sinclair (SBGI) has been a “problem-child” for the broadcast industry for a while now. I would stay away from this stock because you do not want to be involved with the many failing regional sports networks (RSNs).
E.W. Scripps (SSP) is doing a station swap with GTN right now. I will withhold judgement until I see the details, but at 8x leverage you can stay away from this tiny broadcaster. They would also win by selling out.
CONCLUSION
The purpose of Multiple Monday is not to argue with Mr. Market, but to understand what investors are willing to pay and ask ourselves whether not we agree. I take the time to manually build this model because I want to create analyses that AI cannot duplicate.
I gain a comparative advantage as an investor by looking at Enterprise Value to Free Cash Flow. Looking at the data this way keeps me honest and has stopped me from buying stocks that I thought were cheap but in fact just had a lot of debt.
Going forward I will add more companies to this tracker and show how I work in operating metrics and other KPIs. Please subscribe to Substack so you can be on my mailing list when I send out more of these trackers.
Let me know your thoughts! What valuation tools do you use for your research? How do you work to develop an edge against computers?
-Accrued Interest