SBGI
Sinclair, Inc.
$12.52
Leveraged Infrastructure
80%
EV/EBITDA × Default Multiple
Strong
·
Conviction
Overvalued
Trading 54.6% above fair value
You pay
$12.52
Bear
$0.00
Fair
$8.10
Bull
$19.84
Bear
$0.00
-100.0%
EBITDA $1B × 6.0x − $4B debt
Fair
$8.10
-35.3%
EBITDA $1B × 7.5x − $4B debt
Bull
$19.84
+58.5%
EBITDA $1B × 9.0x − $4B debt
Adjust Assumptions
7.5x
Key Value Driver
EV/EBITDA multiple (7.5x) vs. 6.5× leverage
Implied Market Multiple
8.1x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (20 analysts)
$19.00
Divergence from AlphaVal
57%
Summary
At 7.5x EV/EBITDA on $1B EBITDA, enterprise value is $4B. After subtracting $4B net debt, equity value is $8.10 per share.
Warnings
Debt is 6.5x 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 1.4 times over. If the company needs to refinance at higher rates, it could struggle to service its debt.
Only 20% of operating profit turns into actual cash for shareholders. Big investments and interest payments consume most of what the business earns.
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 $19.00 (from 20 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