DCF Studio

    SBAC · NMS · Real Estate

    SBA Communications Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 58.02

    Market price

    USD 178.59

    Implied upside

    -67.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedReported capital expenditure averages 8.34% of revenue against depreciation of 18.43%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 18.43% of revenue so the forecast is not handed free growth. Override it if the reported figure is right.

    Value Per Share

    Perpetuity growth
    USD 58.02-67.5%
    Exit multiple
    USD 168.39-5.7%
    Market price
    USD 178.59

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn1bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 2.9bnUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.1bn+2.2%
    EBITUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bn+2.2%
    NOPATUSD 1.2bnUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.3bn+2.2%
    Add depreciation & amortisationUSD 530.5mUSD 542.5mUSD 554.7mUSD 567.1mUSD 579.9m+2.2%
    Less capital expenditureUSD -530.5mUSD -542.5mUSD -554.7mUSD -567.1mUSD -579.9m+2.2%
    Less increase in working capitalUSD 52.2mUSD 53.4mUSD 54.6mUSD 55.8mUSD 57.1m-2.2%
    Free cashflow to firmUSD 1.3bnUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bn+2.2%
    Discount factor0.96330.89390.82950.76980.7143-
    Present valueUSD 1.2bnUSD 1.2bnUSD 1.1bnUSD 1.1bnUSD 1.0bn-5.1%
    Present Value Of The ForecastUSD 5.6bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.989Reported 0.984, pulled toward 1.0 (Blume)
    Cost of equity10.44%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 18.9bn55.3% of capital
    Total debtUSD 15.3bn44.7% of capital, book value as a proxy
    Tax rate10.9%Effective, capped at statutory
    WACC7.76%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 58.02

    74% of EV

    Forecast FCFF, final year
    USD 1.4bn
    Capex at depreciation, working capital in reinvestment
    USD 1.3bn
    Less reinvestment at g/ROIC (16.5% of NOPAT)
    USD -222.3m
    Capitalised
    USD 1.1bn
    ROIC (reported)
    15.2%
    Terminal value, undiscounted
    USD 22.0bn
    Terminal value, discounted
    USD 15.7bn
    Enterprise value
    USD 21.3bn
    Less net debt
    USD 15.0bn
    Equity value
    USD 6.2bn

    Exit at 18.4x EBITDA

    Value per shareUSD 168.39

    83% of EV

    Terminal value, undiscounted
    USD 38.6bn
    Terminal value, discounted
    USD 27.6bn
    Enterprise value
    USD 33.2bn
    Less net debt
    USD 15.0bn
    Equity value
    USD 18.1bn

    Spread between methods: 97%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.76%123.90144.18170.58206.43257.98
    6.76%75.8587.20101.15118.72141.59
    7.76%43.1049.9458.0267.7479.67
    8.76%19.3323.6428.5934.3641.16
    9.76%1.284.077.2110.7814.87

    Outlined: this model. Green text: above today's price of 178.59. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year2.2%12.7%+10.4pp
    EBIT margin48.2%77.8%+29.7pp
    Discount rate7.8%5.7%-2.1pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.