What’s Twitter’s Valuation?



Analysis of Twitter’s price and book value figures

Twitter (TWTR) is trading at a price-to-book value of 2.5x. The stock’s price-to-sales ratio is 4.8x, while its price-to-estimated-sales for the current year is 4.9x.

The company has an EV (enterprise value) of $9.4 billion, which implies that the company has current EV to trailing 12-month sales of 3.8x. The EV-to-projected-sales ratio for this year is 3.9x, while the EV-to-estimated-sales ratio for next year is 3.7x.

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Where do Twitter’s EBITDA and ratios stand?

Twitter’s EBITDA (earnings before interest, tax, depreciation, and amortization) margin for last year was 9%, and that yielded EBITDA of $217.2 million, which was up 9% from the prior year. For the current year, Wall Street is expecting the company to post EBITDA of $691.9 million.

EV (enterprise value) to adjusted EBITDA for this year is expected to be 13.6x. For next year, EV-to-adjusted EBITDA is expected at 12.6x. Twitter stock is trading at a price to EBITDA of 54.1x. In comparison, peers Facebook (FB), Alphabet (GOOG), eBay (EBAY), and Amazon (AMZN) are trading at price-to-EBITDA ratios of 27.3x, 20.2x, 13.3x, and 37.1x, respectively.

Earnings and sales

The EPS for last year came on total sales of $2.5 billion, which fell 1% annually. Sales for this year are expected to expand to ~$2.4 billion in 2016 to ~$2.5 billion next year.

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Inside Twitter’s cash flow metrics

Twitter has $4.1 billion in cash in hand. The stock is trading at a price-to-cash flow and a price-to-free-cash-flow ratio of 15.1x and 20.4x, respectively. The trailing 12-month EV to cash flow to the company is 12.1x, while the trailing 12-month EV to free cash flow is 16.4x.

Twitter’s debt position

The company has total debt of $1,746 million with $80 million in short-term debt and $1,666 million in long-term debt. With total capital of $6,475 million, the company’s total debt to total capital is 27%.

Its debt to assets and debt to equity are 0.25x and 36.9x, respectively.


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