Forward enterprise and price multiples
In this part of the series, we’ll look at the value proposition of Sprint (S) in the US telecom industry as of December 23, 2015. First, let’s look at select multiples of the telecom company and the other key players in the industry. The top four US wireless players are Verizon (VZ), AT&T (T), T-Mobile (TMUS), and Sprint.
As of December 23, 2015, Sprint had a forward EV/EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) of ~7.1x. Meanwhile, AT&T’s and Verizon’s were ~6.1x and ~6.5x, respectively. T-Mobile’s was ~5.9x.
In terms of forward PCF (price-to-cash flow) ratio, Sprint’s figure was at ~2.7x on December 23, 2015. AT&T’s, Verizon’s, and T-Mobile’s were ~5.1x, ~5.8x, and ~3.9x, respectively.
Sprint is largely a wireless telecom company. The carrier made ~$7.5 billion of revenue in the wireless segment in fiscal 2Q15, or calendar 3Q15. Its wireline revenue was ~$0.61 billion during the same quarter. Among the key US wireless players, AT&T and Verizon have significant wireline operations. AT&T also owns the satellite TV provider DIRECTV.
In terms of size, Sprint had a market capitalization of ~$15.6 billion on December 23, 2015. Meanwhile, AT&T, Verizon, and T-Mobile had market caps of ~$214 billion, ~$191 billion, and ~$32.8 billion on the same date.
You can get diversified exposure to Sprint by investing in the iShares US Telecommunications ETF (IYZ). Sprint made up ~3.9% of the ETF at the end of October 2015.