3 Consumer Stocks to Avoid: Polaris, Nexstar Media, Gray Television

Introduction

Consumer discretionary businesses thrive or decline based on the overall economy. Recently, demand trends have favored this industry, resulting in a 15.5% return over the past six months. However, this stability can be misleading, as many companies in this space lack recurring revenue streams and rely on short-term trends.

Polaris (PII)

* Market Cap: $2.46 billion
* Reasons for Concern:
* Declining revenue (8.2% annualized over the past two years)
* Declining earnings per share (12.4% annualized over the past five years)
* Eroding returns on capital

Nexstar Media (NXST)

* Market Cap: $4.65 billion
* Reasons for Caution:
* Subpar revenue growth (2.5% annualized over the past two years)
* Anticipated flat revenue in the next 12 months
* Low returns on capital

Gray Television (GTN)

* Market Cap: $399.2 million
* Reasons for Hesitation:
* Modest revenue growth (2.1% annualized over the past two years)
* Estimated revenue decline in the next 12 months
* Overleveraged (6× net debt-to-EBITDA ratio)

Conclusion

Polaris, Nexstar Media, and Gray Television exhibit concerning financial metrics and weak demand prospects. Investors should exercise caution before considering these stocks for their portfolios.