Simple Concepts Research Group

Is It Time to Buy The Dip In Sinclair Broadcast Group (NASDAQ: SBGI)?

by | Nov 29, 2021 | 52 Week Lows, Stock Picks

Sinclair Broadcast Group (SBGI) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Sinclair Broadcast Group (SBGI) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Sinclair Broadcast Fundamentals

SBGI Stock Rating

Stock Price Target: $37.08

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Sinclair Broadcast in comparison to the Broadcasting industry and the S&P 500.

Sinclair Broadcast is a Small Cap company with a Market Cap of $164M.

How are investors using Sinclair Broadcast earnings yield to assess the company?

Sinclair Broadcast Group (SBGI stock)_ Earnings Yield in Comparison to the Broadcasting Industryy, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Sinclair Broadcast is 22.83%%, in comparison to 3.46% for the S&P 500 and 1.48% for the 10-year treasury bond. The median earnings yield for the Broadcasting industry is 11.75%.

What does Sinclair Broadcast Price-to-Earnings Ratio (P/E) tell investors about the company?

Sinclair Broadcast Group (SBGI stock)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Broadcasting Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Sinclair Broadcast is currently trading at a P/E of 12.64. The P/E for the Broadcasting industry is 16.61 and the P/E for the S&P 500 is 28.94.

What is the current Price-to-Sales Ratio (P/S) for Sinclair Broadcast?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Sinclair Broadcast is currently trading at a P/S of 0.33. The P/S for the Broadcasting industry is 1.03 and the P/S for the S&P 500 is 3.14.

How does Sinclair Broadcast Price-to-BookRatio (P/B) compare to the Broadcast industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Sinclair Broadcasting does not currently have a reported P/B ratio. The P/B for the Broadcasting industry is 1.58 and the P/B for the S&P 500 is 4.74.

How attractive is Sinclair Broadcast Return on Invested Capital (ROIC) to investors?

Sinclair Broadcast Group (SBGI )_ Return on Invested Capital in Comparison to the Broadcasting Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Sinclair Broadcast ROIC is currently 1.30% in comparison to 5.50% for the Broadcasting industry and 8.60% for the S&P 500.

What is Sinclair Broadcast YTD Performance in comparison to its industry and the total market?

The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year. 

The YTD performance for Sinclair Broadcast is -25.46%. The Broadcasting industry has a YTD performance of 0.31% in comparison to the YTD S&P 500 performance of 25.22%.

Sinclair Broadcast Group (SBGI)_ YTD Performance in Comparison to the Broadcasting Industry and the S&P 500

Recent Financial Results (Q3, 21)

  • Consolidated total revenue of $1,535M in comparison to a flat third quarter in 2020
  • Consolidated operating income of $73M, including $27 million of non-recurring costs, increased compared to an operating loss in the third quarter of 2020 of $4,216M, which included a $4,264M impairment taken on the Local Sports segment relating to goodwill and definite-lived intangible assets, and $13M of Adjustments
  • Net income reported of $19M versus a net loss of $3,256M in the prior year period
  • Consolidated Adjusted EBITDA of $451M, decreased 39% versus the third quarter of 2020

Stock Price Target: $37.08

Company Overview

SBGI Stock Rating

Sinclair Broadcast Group operates as a diversified television media company in the US. The company operates in two segments: Broadcast and Local Sports. It owns and provides various operating services to television stations.

As of December 2020, it owned, operated, and provided services to 188 stations in 88 markets, which broadcast 628 channels. The company also operates various networks carried on distribution platforms and owns regional sports network, which has the exclusive rights to air games of 45 professional sports teams and other sporting events.

Additionally, Sinclair owns various non-media related investments, including private equity, mezzanine financing, and real estate investments. It also publishes Tennis Magazine and operates, an online tennis platform.

Sinclair Broadcast Group, Inc. was founded in 1986 and is headquartered in Hunt Valley, Maryland. The current CEO is Chris Ripley.

Be sure to add Sinclair Broadcast Group (SBGI stock) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.