What’s behind Sprint’s Latest Valuation?



Sprint’s scale

As of January 24, Sprint (S) was the fourth-largest US wireless carrier in terms of market capitalization at $25.5 billion. T-Mobile (TMUS) has a market capitalization of $58.3 billion, Verizon’s (VZ) market capitalization is $235.8 billion, and AT&T’s (T) market capitalization is $222.7 billion. Market capitalization denotes a company’s market value at a particular time, which is its shares outstanding multiplied by its stock price.

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Short interest ratio

As of January 24, Sprint stock’s short interest as a percentage of float (or short interest ratio) was ~15.91%. A stock’s short interest ratio of higher than 40% indicates that traders and investors foresee a correction in the stock’s price.

Sprint’s valuation metrics

On January 24, Sprint had a trailing-12-month EV-to-EBITDA (enterprise value-to-earnings before interest, tax, depreciation, and amortization) multiple of ~4.74x in comparison to the multiples of its closest peers. T-Mobile, AT&T, and Verizon had trailing-12-month EV-to-EBITDA multiples of ~7.67x, ~7.48x, and ~7.44x, respectively.

Sprint anticipates its EV-to-EBITDA in fiscal 2018 (year ending March 2019) to be ~4.49x, while in fiscal 2019, the multiple is expected to be ~4.34x.


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