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Inside Dish Network’s Valuation Metrics

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Jan. 9 2017, Updated 9:05 a.m. ET

Valuation metrics

Key valuation metrics include PE (price-to-earnings), EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization), PCF (price-to-cash-flow), and PFCF (price-to-free-cash-flow) multiples.

Price-based multiples measure a company’s value from a shareholder’s perspective. Enterprise value multiples help investors understand a company’s value from the perspective of stakeholders. These are forward multiples based on the expected value of the denominator after one year.

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Is Dish undervalued?

As the graph above shows, Dish Network (DISH) has a forward EV-to-EBITDA multiple of 12.9x and a PE multiple of 21.7x. By contrast, Netflix (NFLX) has a forward EV-to-EBITDA multiple of 52.9x and a PE multiple of 129.9x.

Peers Twenty-First Century Fox (FOXA) and Comcast (CMCSA) have forward EV-to-EBITDA multiples of 8.8x and 8.3x, respectively. In the peer group, Netflix has the highest forward PE multiple, with 129.9x. Based on its forward EV-to-EBITDA multiple, it appears that Dish is undervalued when compared with peers.

Dish’s value proposition

We should note, however, that we have yet to see whether Dish’s pay-TV subscriber base will be boosted by the new version of Sling TV in coming quarters. Given the rising competition from OTT (over-the-top) operators like Netflix, it remains to be seen whether the new version of Sling TV will be successful at all. But we shouldn’t forget that Dish has a strong wireless spectrum—a valuable asset for the company going forward.

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