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.
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.