Is There Now an Opportunity in SBA Communications After Recent Tower Asset Sale?

If you’re standing at the crossroads wondering whether it’s the right time to buy, hold, or let go of SBA Communications stock, you’re not alone. As one of the major players in the wireless infrastructure world, SBA Communications has caught more than a few eyes and sparked some heated debates thanks to its recent stock performance. In the last year, shares have slumped by 18.0%, with a year-to-date slip of 6.4%. Even when zooming out to the five-year mark, the stock has dropped 35.5%. Clearly, it’s been a rocky ride for investors, with markets signaling shifting perceptions of growth and risk around the tower industry amid broader changes in the telecom landscape.

Yet, here’s what might surprise you: despite all the volatility, SBA Communications currently gets a value score of 6 out of 6 in our latest check, meaning it ranks as undervalued across every measure we track. That’s not something you see every day, and it definitely warrants a closer look. Let’s dig into how those valuation scores are calculated, and why using just one or two approaches can sometimes miss the bigger picture. Stick around, because before we’re done, I’ll show you a perspective on valuation that even the savviest analysts often overlook.

Why SBA Communications is lagging behind its peers

Approach 1: SBA Communications Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model works by projecting a company’s future adjusted funds from operations, then discounting those estimated cash flows back to today’s dollars. This approach is especially effective for asset-heavy businesses like SBA Communications, where long-term cash generation is a critical lens for valuation.

For SBA Communications, analysts forecast Free Cash Flow will reach approximately $1.55 billion by 2029, with projections for the next decade climbing beyond $1.9 billion according to extended models. While exact current trailing twelve-month figures are unavailable, the trend is clear: cash flows are expected to steadily grow over time, based on both analyst estimates for the next five years and Simply Wall St’s longer-range extrapolations. All assumptions are modeled in US dollars for consistency.

On this basis, the DCF calculation arrives at an estimated intrinsic value of $265.21 per share. Given the current market price, this represents a 29.3% implied discount and suggests the stock is notably undervalued compared to its future cash flow potential.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for SBA Communications.

Our Discounted Cash Flow (DCF) analysis suggests SBA Communications is undervalued by 29.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: SBA Communications Price vs Earnings (PE) Ratio Analysis

The price-to-earnings (PE) ratio is a go-to valuation method for evaluating profitable companies like SBA Communications, as it compares the company’s current share price to its earnings, making it easy to gauge what investors are willing to pay for each dollar of profit. A “fair” PE ratio, however, will shift depending on factors such as growth expectations and perceived risks. Faster-growing or more stable businesses typically command higher PE ratios, while those facing uncertainty or slower growth tend to trade at lower ones.

At the moment, SBA Communications trades at a PE ratio of 22.93x. For context, this sits above the industry average of 17.46x for specialized REITs, but well below the peer average of 36.08x. This intermediate position could reflect the market’s view that SBA's growth prospects are solid, though perhaps not as aggressive as some of its closest competitors. But simple comparisons to peers and industry mean can gloss over important company-specific factors.

This is where Simply Wall St's “Fair Ratio” comes in, a proprietary benchmark that considers SBA Communications’ unique mix of earnings growth, profit margin, risk level, market cap, and industry performance. By incorporating all these moving parts, the Fair Ratio (calculated at 34.34x) gives a more holistic picture of what the market should be willing to pay for SBA's earnings.

Comparing SBA’s actual PE ratio of 22.93x to the Fair Ratio of 34.34x, the stock appears undervalued on this measure. The gap suggests that investors may be underestimating the company’s fundamentals and growth potential.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your SBA Communications Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. Narratives are Simply Wall St’s easy, powerful tool that lets you base investment decisions on the full story behind a company, not just the numbers. In simple terms, a Narrative is the combination of your view on SBA Communications’ future, including how you see its growth, risks, and key trends, linked directly to your own forecast for revenue, earnings, and fair value.

Narratives connect a company’s real-world situation to a financial forecast and then to a fair value, giving you a logical trail from story to stock price. They are simple to create or follow within the Community page, making it possible for anyone, not just professional analysts, to share their perspective and compare it to others. Narratives help you decide when to buy or sell by constantly updating your fair value against the current share price as new news or earnings arrive. For example, a bullish Narrative on SBA Communications might project robust 5G-driven tower demand and set a fair value as high as $285, while a more cautious investor, concerned about industry headwinds, could place fair value at $230. Both views are updated in real time as fresh data comes in.

Do you think there's more to the story for SBA Communications? Create your own Narrative to let the Community know!

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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