UNIT
Uniti Group Inc.
$11.04
Leveraged Infrastructure
80%
EV/EBITDA × Telecom Multiple
Strong
·
Conviction
Overvalued
Trading 401.8% above fair value
You pay
$11.04
Bear
$0.00
Fair
$2.20
Bull
$4.36
Bear
$0.00
-100.0%
EBITDA $1B × 7.2x − $10B debt
Fair
$2.20
-80.1%
EBITDA $1B × 8.4x − $10B debt
Bull
$4.36
-60.5%
EBITDA $1B × 9.6x − $10B debt
Key Value Driver
EV/EBITDA multiple (8.4x) vs. 8.7× leverage
Implied Market Multiple
11.0x
Summary
Our base-case estimate uses EV/EBITDA × Telecom Multiple. We then blend that result with the average analyst price target of $11.00 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $2.20 per share.
Warnings
Debt is 8.7x 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 1.9 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 $11.00 (from 13 analysts). Our estimate is 100% 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