Television broadcasting company Sinclair Broadcasting Group (SBGI) is experiencing a significant amount of success as it continues to grow its broadcasting network through acquisitions and strategic partnerships. The Company is trading near 52 week highs following news the company has reached an agreement with DirecTV on a new retransmission consent agreement. It has also entered into a short-term extension of its existing agreement. As a result, DirecTV will continue to carry all of Sinclair’s stations. This comes a day after saying it will pay$370 million to buy 18 stations from Barrington Broadcasting Group, and comes only days after the purchase of Cox Media Stations.
While the stock is up 54% in the past year, Sinclair Broadcasting is trading at a price earnings (PE) ratio of 10 compared to an industry PE of 17.5. This is a cheap stock considering First Call is projecting a 78% increase in EPS next year. The First Call consensus is for $2.35 in EPS next year. Based on the current PE of 10, this indicates a target stock price of $23.50, a 30% increase from current levels. First Call consensus is a strong buy with a 2.0 rating.
Sinclair Broadcasting has a dividend yield of 3.33%. The company increased its dividend 25% in the past year. On December 14, 2012, the Company paid a$1.00per share special dividend and a$0.15per share quarterly cash dividend to its shareholders. I expect the dividend to increase in the future as SBGI continues to increase EPS.
Sinclair Broadcasting Group had an increase in 4th quarter 2012 earnings of 161% and full year 2012 increase in earnings per share of 89%.
The Company reported diluted earnings per common share of$0.73for the three-month period ended December 31, 2012versus diluted earnings per common share of$0.28in the prior year period.
Net broadcast revenues from continuing operations were$920.6 million for the twelve months ended December 31, 2012, an increase of 42.1% versus the prior year period result of$648.0 million. The Company had operating income of$329.3 million in the twelve-month period, as compared to operating income of$225.6 million in the prior year period. Net income attributable to the Company was$144.7 million in the twelve-month period, versus net income of$75.8 million in the prior year period.
The Company reported diluted earnings per common share of$1.78in the twelve-month period ended December 31, 2012versus diluted earnings per common share of$0.94in the prior year period.
The Company expects first quarter 2013 station net broadcast revenues from continuing operations, before barter, to be approximately$251.9 million to $254.9 million, up 32.0% to 33.5% as compared to first quarter 2012 results of$190.9 million. This assumes approximately$0.4 millionand$2.5 million in political and Super Bowl revenues, respectively, in the first quarter 2013, as compared to$3.6 millionand$0.1 million in the first quarter 2012. The 2013 first quarter net broadcast revenue estimates assume$62.6 million related to the Acquisitions.