SBA Communications CorporationSBACNASDAQ

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DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $509.90 per share(market-calibrated)

+158.3%

Upside to Fair Value

Current

$197.38

Pure Model

$567.62

Fair Value

$509.90

Bull Case

$677.63

Bear Case

$479.59

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $567.62.

What's Driving This Ratingfor SBAC

↓

CapEx normalizing toward maintenance

Historical CapEx is 7.37% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$184M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 80.35% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 0.94% revenue growth, fading to 2.50% by Year 10. Revenue reaches $3.8B (vs $2.8B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 84.57% indicates efficient cash generation. FCF reaches $3.2B by Year 10 (84.21% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.83

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.25%

Cost of Debt

Pre-tax Cost of Debt0.61%

Tax Rate15.10%

After-tax Cost of Debt0.52%

Equity Weight (E/V)58.01%

Debt Weight (D/V)41.99%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (58.01% × 8.25%) + (41.99% × 0.52%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.8B	$3.0B	$3.2B	$3.5B	$3.8B
EBIT	$2.3B	$2.4B	$2.6B	$2.8B	$3.0B
Tax	$345M	$366M	$390M	$421M	$458M
NOPAT	$1.9B	$2.1B	$2.2B	$2.4B	$2.6B
+ Depreciation	$546M	$579M	$618M	$666M	$725M
- Capex	$209M	$190M	$167M	$143M	$94M
- Δ NWC	$8M	$32M	$40M	$36M	$28M
Free Cash Flow	$2.3B	$2.4B	$2.6B	$2.9B	$3.2B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$2.1B	$2.1B	$2.0B	$2.0B	$1.9B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.2B

Terminal Growth Rate2.50%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$108.6B

PV of Terminal Value$63.6B

Exit Multiple Method

Year 10 EBITDA$3.8B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$82.7B

PV of Terminal Value$48.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$19.9B

PV of Terminal Value$63.6B

Enterprise Value$83.5B

(-) Net Debt$15.1B

Equity Value$68.4B

Shares Outstanding107M

Price per Share$638.34

Exit Multiple Method

PV of Projected FCFs$19.9B

PV of Terminal Value$48.4B

Enterprise Value$68.3B

(-) Net Debt$15.1B

Equity Value$53.3B

Shares Outstanding107M

Price per Share$496.89

Pure Model Fair Value

$567.62

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.50%	$872.45	$831.59	$792.65	$755.54	$720.16
4.50%	$626.46	$692.94	$792.65	$755.54	$720.16
5.50%	$491.34	$524.03	$567.62	$628.63	$720.16
6.50%	$402.00	$420.69	$444.04	$474.07	$514.11
7.50%	$336.56	$348.28	$362.33	$379.51	$400.98

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$479.59

143.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.04

Base Case

$567.62

187.6% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.83

Bull Case

$677.63

243.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.71

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth0.94%

Year 3 Revenue Growth3.63%

Year 5 Revenue Growth4.38%

Year 7 Revenue Growth3.63%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin80.35%

Tax Rate15.10%

Historical Capex / Rev7.37%

Terminal Capex / Rev2.50%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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