WOW
WideOpenWest, Inc.
$5.20
Leveraged Infrastructure
80%
EV/EBITDA × Telecom Multiple
Mild
·
Conviction
Fair Value
Trading 13.5% below fair value
You pay
$5.20
Bear
$3.49
Fair
$6.01
Bull
$8.54
Bear
$3.49
-32.9%
EBITDA $0B × 6.0x − $1B debt
Fair
$6.01
+15.6%
EBITDA $0B × 7.0x − $1B debt
Bull
$8.54
+64.2%
EBITDA $0B × 8.0x − $1B debt
Adjust Assumptions
7.0x
Key Value Driver
EV/EBITDA multiple (7.0x) vs. 4.6× leverage
Implied Market Multiple
6.7x
Summary
At 7.0x EV/EBITDA on $0B EBITDA, enterprise value is $2B. After subtracting $1B net debt, equity value is $6.01 per share.
Warnings
Debt is 4.6x 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 2.4 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.
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