SBA Communications (SBAC) Could Be 24% Undervalued After Its $3.4b Debt Raise
Why SBA Communications is in focus after a large debt raise
SBA Communications (SBAC) has just completed several fixed income offerings totaling more than $3.4b, including 4.875% notes due 2030, 5.15% notes due 2031 and 5.450% notes due 2033.
These unsecured, callable senior notes, supported by a broad syndicate of co lead underwriters across multiple tranches, give investors fresh information about the company’s capital structure and funding costs to evaluate alongside the stock’s recent share price performance.
See our latest analysis for SBA Communications.
The debt issuance comes as SBA Communications trades at US$178.02, with the 1 day share price return slightly positive at 0.68%, the 90 day share price return down 18.93%, and the 1 year total shareholder return declining 23.09%, pointing to fading momentum even before the latest funding move.
If you are weighing how this refinancing fits into broader themes in infrastructure and digital connectivity, it can be useful to compare SBA Communications with other companies exposed to long term data and power demand, starting with 36 power grid technology and infrastructure stocks
SBA Communications has raised more than US$3.4b just as its share price has been under pressure. Are investors rethinking the core tower business, or simply marking sentiment lower, and how does that show up in today’s valuation?
Most Popular Narrative: 24.3% Undervalued
Against SBA Communications' last close at $178.02, the most followed narrative points to a fair value of $235.10, using an 8.56% discount rate and a detailed earnings path to that figure.
Analysts expect earnings to reach $930.0 million (and earnings per share of $9.2) by about June 2029, down from $1.0 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $740.2 million.
Want to see what bridges a shrinking profit pool to a higher implied value per share? The narrative leans on modest revenue gains, recalibrated margins, and a richer future earnings multiple to close that gap.
Result: Fair Value of $235.10 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, investors still need to weigh risks, including wireless carrier consolidation that could pressure SBA Communications' tower leasing economics, as well as the impact of refinancing sizeable debt at higher coupon levels.
Find out about the key risks to this SBA Communications narrative.
Next Steps
Given the mix of pressure and optimism around SBA Communications, why wait to form an informed view when you can test the data yourself using the 4 key rewards and 4 important warning signs?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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