Sinclair currently trades at $14.53 per share and has shown little upside over the past six months, posting a small loss of 1.3%. The stock also fell short of the S&P 500’s 5% gain during that period.
Is now the time to buy Sinclair, or should you be careful about including it in your portfolio? See what our analysts have to say in our full research report, it’s free.
Why Do We Think Sinclair Will Underperform?
We're cautious about Sinclair. Here are three reasons why SBGI doesn't excite us and a stock we'd rather own.
1. Revenue Spiraling Downwards
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Sinclair’s demand was weak and its revenue declined by 7.2% per year. This wasn’t a great result and is a sign of poor business quality. 
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Sinclair’s revenue to drop by 8.7%, a decrease from its 7.2% annualized declines for the past five years. This projection is underwhelming and suggests its products and services will face some demand challenges.
3. EPS Barely Growing
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sinclair’s EPS grew at an unimpressive 4.4% compounded annual growth rate over the last five years. On the bright side, this performance was better than its 7.2% annualized revenue declines and tells us management adapted its cost structure in response to a challenging demand environment.
Final Judgment
Sinclair doesn’t pass our quality test. With its shares trailing the market in recent months, the stock trades at 2.3× forward EV-to-EBITDA (or $14.53 per share). This multiple tells us a lot of good news is priced in - you can find more timely opportunities elsewhere. We’d recommend looking at a dominant Aerospace business that has perfected its M&A strategy.
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