SBGI - Embedded Expectations Analysis - 2020 09 03
Sinclair Broadcasting Group, Inc. (SBGI:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.0x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about next-gen TV, adjusted FCF, and adjusted EBITDA suggest the potential for near-term headwinds, the firm's robust business model and scaling opportunities suggest longer-term upside remains warrantedSpecifically, management may be overstating the capabilities of the next-gen TV launch in multiple markets and the popularity of programming assets from their Comcast agreement. Furthermore, they may have concerns about the continued subscriber churn across their segments, the ongoing local sports adjusted EBITDA, and the sustainability of the positive performance in the education category. Additionally, they may lack confidence in their ability to sustain their liquidity position, mitigate headwinds from their distributor rebate accrual, and meet their expected free cash flow per share for Q3 2020. Finally, they may be downplaying concerns about the revenue mix from back-to-school products
That said, although management's concerns suggest the potential for near-term headwinds, SBGI's robust business model and scaling opportunities implies long-term outperformance remains warranted for SBGI
Sinclair Broadcast Group is a television broadcasting company with using the company's spectrum to bring together content providers, advertisers, and consumers on various platforms. The content, distributed through the company's broadcast platform, consists of programming provided by third-party networks and syndicators, local news, the company's own networks, and other original programming produced by the company The company also distributes its original programming, and owned and operated network, on other third-party platforms. The company operates technical services companies focused on supply and maintenance of broadcast transmission systems as well as research and development for the development of broadcast technology.
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