Analyst ups 2012 estimates for Sinclair


After digesting the Q4 results from Sinclair Broadcast Group Inc. (SBGI), Wells Fargo Securities analyst Marci Ryvicker has raised her financial estimates for the company. That’s mainly due to the addition of 15 stations for Four Points Media and Freedom Communications.

“Results and guidance were messy due to acquisitions, but we are raising estimates.” Ryvicker told clients in a research report affirming here “outperform” (buy) rating on Sinclair. “Q4 broadcast revenue and EBITDA were slightly above our and consensus expectations, while EPS was in-line with consensus at $0.32 after adjusting for a one-time interest expense charge. Guidance for Q1 and 2012 was a bit messy as Q1 incorporated the Four Points acquisition (as it should given that this acquisition closed effective 1/1/2012) and Freedom LMA, while the full year incorporated a full year of Four Points operations, 3 quarters of Freedom (which is expected to close on 4/1) operations, and the Q1 Freedom LMA,” the analyst explained.

“At the end of the day, core revenue and EBITDA guidance (excluding all acquisition related items) for Q1 was above our expectations, and we are now incorporating both Four Points and Freedom in our forecasts for 2012 and beyond. Bottom line: our 2012 estimated revenue increased 18.7% to $995M, EBITDA rose 20.5% to $357M, and EPS is now $1.56 versus our prior $1.29,” Ryvicker wrote. “We also introduce our 2013 estimates as follows: revenue of $980M, EBITDA of $304.6M, and EPS of $1.05. We maintain our Outperform rating and raise our valuation range to $15-17 from $14-16.”

Ryvicker figures the 15 stations from Four Points and Freedom will generate an incremental $154M in revenue in 2012 (with a full year of Four Points and three quarters of Freedom).

The analyst has been focusing quite a bit on dividend paying media companies lately – and those likely to raise their dividend payments or begin paying dividends. “We think at some point post the successful integration of the stations, SBGI will revisit its capital allocation policy. That said, we recognize that SBGI already has the highest dividend yield in the media sector, at 3.9%,” Ryvicker noted.

And, of course, she wrote about the all-important automotive category.

“Auto is pacing up nicely. Auto was up roughly 12% in Q4 and comprised 22.3% of time sales,” she said of the Sinclair results. “Currently, auto is pacing up low single digits in Q1 despite tough Super Bowl comparisons (in 2011 SBGI had the Super Bowl on 20 FOX stations vs. on 1 NBC this year) and faces easier comps throughout 2012 (due to the March ’11 Japanese tsunami). Importantly, SBGI has not seen cancellations from GM despite its change in ad agencies,” the Wells Fargo analyst said.