Why Sinclair Broadcast (SBGI) Is Down Today

NEW YORK (TheStreet) -- Sinclair Broadcast (SBGI) was falling 5.4% to $26.35 following a quarterly earnings report that missed earnings estimates.

In its fourth-quarter earnings report the broadcast company posted earnings of 29 cents a share, missing Capital IQ Consensus Estimate of 34 cents a share by 5 cents. Revenue rose 29.8% in the quarter to $27.7 million, beating analyst estimates of $409.97 million.

Sinclair Broadcast said it generated $8.2 million in incremental revenue from the Super Bowl airing on Fox (FOXA). The company expects to see an additional $3.6 million in revenue from the Olympics as the event is airing on NBC (CMCSA).

Must read: How NBC Put the Olympics Everywhere

TheStreet Ratings team rates SINCLAIR BROADCAST GP as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate SINCLAIR BROADCAST GP (SBGI) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its notable return on equity, robust revenue growth, good cash flow from operations, compelling growth in net income and solid stock price performance. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to other companies in the Media industry and the overall market, SINCLAIR BROADCAST GP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The revenue growth came in higher than the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 30.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 38.5% when compared to the same quarter one year prior, rising from $26.25 million to $36.34 million.
  • Net operating cash flow has increased to $97.27 million or 17.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -11.38%.
  • Compared to its closing price of one year ago, SBGI's share price has jumped by 103.58%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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