FYBR
Frontier Communications Parent, Inc.
$38.49
Leveraged Infrastructure
80%
EV/EBITDA × Telecom Multiple
Strong
·
Conviction
Overvalued
Trading 163.2% above fair value
You pay
$38.49
Bear
$6.13
Fair
$14.62
Bull
$23.12
Bear
$6.13
-84.1%
EBITDA $2B × 6.0x − $11B debt
Fair
$14.62
-62.0%
EBITDA $2B × 7.0x − $11B debt
Bull
$23.12
-39.9%
EBITDA $2B × 8.0x − $11B debt
Adjust Assumptions
7.0x
Key Value Driver
EV/EBITDA multiple (7.0x) vs. 5.3× leverage
Implied Market Multiple
9.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (11 analysts)
$34.33
Divergence from AlphaVal
57%
Summary
At 7.0x EV/EBITDA on $2B EBITDA, enterprise value is $15B. After subtracting $11B net debt, equity value is $14.62 per share.
Warnings
Debt is 5.3x annual operating profit. Because the company carries so much debt, even small shifts in business value cause big swings in the stock price.
Operating profit only covers interest payments 2.6 times over. If the company needs to refinance at higher rates, it could struggle to service its debt.
We value this business based on total operating profit relative to total enterprise value (debt + equity). Profit-per-share metrics are unreliable when debt makes up most of the company's value.
Wall Street's average price target is $34.33 (from 11 analysts). Our estimate is 57% below the consensus -- consider that gap carefully.
Key Risks
- Debt refinancing at higher rates compresses equity value quickly
- EBITDA flatters — capex, interest, and taxes eat the cash flow
- Cord-cutting and wireless substitution are structural headwinds for cable