SHEN
Shenandoah Telecommunications Company
$15.88
Leveraged Infrastructure
80%
EV/EBITDA × Telecom Multiple
Strong
·
Conviction
Overvalued
Trading 45.7% above fair value
You pay
$15.88
Bear
$6.64
Fair
$10.90
Bull
$15.17
Bear
$6.64
-58.2%
EBITDA $0B × 7.2x − $1B debt
Fair
$10.90
-31.4%
EBITDA $0B × 8.4x − $1B debt
Bull
$15.17
-4.5%
EBITDA $0B × 9.6x − $1B debt
Key Value Driver
EV/EBITDA multiple (8.4x) vs. 5.3× leverage
Implied Market Multiple
13.0x
Summary
Our base-case estimate uses EV/EBITDA × Telecom Multiple. We then blend that result with the average analyst price target of $29.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $10.90 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.
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 $29.00 (from 8 analysts). Our estimate is 78% 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