Should We Follow Steven Cohen Into Nexstar Broadcasting Group, Inc. (NXST)?

Several days ago, Steven Cohen, the famous hedge fund manager, accumulated nearly 1.57 million shares in Nexstar Broadcasting Group, Inc. (NASDAQ:NXST). Interestingly, this company is currently in the portfolio of many other successful investors, including Joel Greenblatt and Jim Simons. Since the beginning of the year, Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) has gained as much as 157% on the market. Is Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) still a good buy after the recent significant rise in its share price?

Impressive first quarter results

Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) is a television broadcasting and digital media company, operating around 64 television stations and 14 digital multi-cast channels in 38 markets in the U.S. The company reported that those stations had around 12.7 million viewers, representing 11.1% of all U.S. television households. The majority of its revenue, $190.17 million, or 47.8% of the total net revenue, was generated from local advertising. National advertising ranked second, with more than $76.1 million in 2012 revenue, while the retransmission compensation and the political advertising contributed nearly $61 million and $46.3 million in sales, respectively.

Recently, the company announced impressive first quarter earnings results. Its local and national core revenues increased 32.6%, from $62.84 million in the first quarter last year to $83.3 million to the first quarter 2013. Overall, the net revenue experienced a high year-over-year growth of 34.2% to $112.2 million. The operating income grew by 1.8% to $17.8 million. Because of a much higher interest expense, its net income came in at only $705,000, much lower than net income of $3 million in the first quarter last year.

Significant leverage and high multiples

What worries me is its significant leverage. As of March 2013, it had $928 million in total debt while cash on hand stayed at only $22.6 million. However, the total net leverage ratio was 4.24, lower than the permitted leverage covenant of 7.25. Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) is trading at around $27.20 per share, with a total market cap of $799.8 million. It seems to be quite expensively valued now as its EV/EBITDA is 10.45. Compared to its much bigger peers, including DIRECTV (NASDAQ:DTV) and CTC Media, Inc. (NASDAQ:CTCM), Nexstar Broadcasting Group, Inc. (NASDAQ:NXST) has the highest valuation among the three.