How Do Sprint’s Forward Valuations Compare to Its Peers?



Sprint’s forward EV-to-EBITDA

The capital-intensive telecom industry has high levels of depreciation and amortization, as well as varying degrees of debt and operating leases. To neutralize these factors, we use the EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] ratio to value telecom stocks. The forward EV-to-EBITDA ratio shows what investors are willing to pay for the next four quarters of estimated EBITDA.

On December 7, 2016, Sprint’s (S) forward EV-to-EBITDA metric was ~6.2x, which was lower than that of T-Mobile (TMUS) at ~6.7x. Meanwhile, integrated US telecom giants Verizon (VZ) and AT&T (T) had similar EV-to-EBITDA metrics of ~6.8x and ~6.7x, respectively.

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Wall Street analyst recommendations for Sprint

As seen in the above chart, on December 7, 2016, the majority of analysts recommended a “hold” on Sprint (S) stock. These recommendations represented ~53.6% of the 28 analysts covering the stock. Meanwhile, ~32.1% of analysts recommended a “sell” on the stock. The remaining ~14.3% of recommendations on the stock were a “buy.”

Sprint’s scale

On December 7, 2016, AT&T was the largest US telecom player, Verizon was the second-largest player, and T-Mobile was the third-largest player by market capitalization. Also, Sprint’s market capitalization remained lower than T-Mobile’s market cap.


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