Hook & Thesis
Sinclair reported a tidy finish to 2025 and issued an upbeat 2026 guide that materially reduces execution risk tied to the mid-term political cycle and a busy sports calendar. Management delivered full-year Adjusted EBITDA of $483 million and is guiding $700-740 million for 2026 while calling for at least $333 million of political advertising revenue. For a company trading around a sub-$1 billion market cap and producing $211 million in free cash flow, that kind of leverage to an improving revenue mix argues for an upgrade and a tactical long.
We’re proposing a mid-term (45 trading days) trade to capture re-rating as political and sports ad dollars flow, supported by a 7%+ dividend that cushions downside and concentrates returns during volatile ad cycles. This is not a buy-and-forget pick; it’s a structured, risk-managed trade for investors who want exposure to a cyclical-but-cash-generative broadcaster with a clear near-term earnings catalyst.
What the business is and why investors should care
Sinclair operates a portfolio of local television stations and complementary digital properties through Local Media and Tennis segments. The business is ad-driven and therefore cyclical, but it benefits from two characteristics investors tend to underweight: (1) large, discrete political advertising spikes tied to election cycles; and (2) a sports calendar that concentrates premium, high-CPM inventory.
Those two drivers move the needle on margins and cash flow. Management’s 2026 guidance explicitly models sizable political revenue and a step-up in Adjusted EBITDA, which, if realized, should compress the company’s valuation multiples relative to its current price more favorably than a flat-ad scenario.
Key fundamentals and the numbers that matter
- Market capitalization: approximately $962 million.
- Enterprise value: about $4.55 billion and an EV/EBITDA around 7.6x on current results.
- Adjusted EBITDA: $483 million for full-year 2025, with management guiding $700-740 million for 2026.
- Political advertising revenue: management expects at least $333 million in 2026.
- Free cash flow: roughly $211 million.
- Dividend: $0.25 per share quarterly declared, implying a yield near 7.1% at current prices.
- Valuation metrics: P/S about 0.29, P/CF ~3.4, price-to-book ~2.82; EPS remains negative at -$0.65 per share on the latest perimeter.
Put simply: the company produces solid cash, pays a chunky dividend, and has explicit 2026 drivers for revenue and EBITDA growth. That combination is attractive for an investor seeking yield plus event-driven upside.
Valuation framing
At a market cap under $1 billion with free cash flow near $211 million, Sinclair’s market valuation does not demand perfection. The current EV/EBITDA of ~7.6x is reasonable for a broadcaster with predictable political spikes and a high-yielding payout. Price-to-sales at ~0.29 and price-to-cash-flow near 3.4x are consistent with a company that is being priced like a distressed media play, yet base cash generation and management guidance suggest 2026 could be a re-rating year.
Comparative multiples to pure-play broadcasters are not in the dataset, but the logic is straightforward: if management hits the $700-740 million Adjusted EBITDA range, the EV/EBITDA multiple would compress materially and create upside to the equity. Conversely, if political ad dollars fall short or costs creep higher, multiples re-expand and the stock underperforms.
Catalysts
- Political advertising tailwinds in 2026 - management earmarked at least $333 million, which is a direct lift to top-line and margins.
- Sports calendar - premium inventory during marquee events should boost CPMs and local ad demand.
- Dividend support and yield attraction - a $0.25 quarterly payout draws income-oriented investors and limits downside volatility.
- Investor conferences and management roadshow - upcoming appearances give transparency and could accelerate re-rating if management delivers confident commentary (events in early March).
- Potential M&A activity - past interest in peers indicates Sinclair remains an active acquirer; any sensible consolidation could unlock synergies or strategic optionality.
Trade plan (actionable)
Direction: Long
Entry price: 13.90
Target price: 16.50
Stop loss: 12.75
Horizon: mid term (45 trading days). We expect the trade to play out across the near-term momentum window created by political ad bookings and early-2026 sports inventory sales. If management confirms bookings and cadence on upcoming calls and at investor conferences, the move to $16.50 is plausible as multiples re-rate and yield-seeking flows bid the stock higher. The stop at $12.75 protects capital if ad flows disappoint or broader sentiment towards local media deteriorates quickly.
Please note: the entry is set at the current market area to capture immediate post-earnings positioning; scale-in is reasonable if volatility spikes around conference commentary.
Technical and sentiment notes
Technical indicators are slightly bearish-to-neutral: the 10- and 20-day SMAs sit above the current price, and the 50-day SMA is higher as well, while RSI is near 39 suggesting room for mean reversion. Short interest is non-trivial (several million shares) with days-to-cover in the high single digits, which adds both downside and upside volatility potential around catalyst dates.
Risks and counterarguments
- Political revenue is lumpy and timing-sensitive. The 2026 guide assumes meaningful political spend. If that spend is delayed, allocated differently, or concentrated in other media, EBITDA could come in well below expectations.
- Advertising cyclicality and secular cord-cutting. Local TV remains exposed to secular audience declines. Even with digital initiatives, ad dollars could shift over time to streaming and platforms, pressuring long-term growth.
- Leverage and balance sheet risk. The company carries substantial leverage metrics that magnify operational misses. A shortfall in cash flow could constrain dividends and reduce strategic flexibility.
- Execution risk on cost saves and synergies. Management must convert advertising dollars to higher margins; any operational missteps or higher-than-expected costs reduce the meaningfulness of the 2026 guide.
- Market sentiment and high short interest. Elevated short interest could amplify downward moves in weak markets or create whipsaw action around catalyst events.
Counterargument to our thesis: A cautious view would highlight negative EPS, high leverage, and the structural decline in linear TV audiences. If political ad bookings fall materially short of management’s floor or if the macro advertising environment weakens, the dividend and current cash flow may not be enough to prevent a meaningful downward re-rating. That scenario would make the stock unattractive despite its yield.
Conclusion - Our stance and what would change our mind
We are upgrading Sinclair to a tactical long and recommending a mid-term trade to $16.50 from an entry near $13.90 with a stop at $12.75. The rationale is straightforward: management’s 2026 guide pins an above-consensus EBITDA outcome driven by a healthy political ad floor ($333M+) plus a strong sports calendar, while free cash flow and a 7%+ dividend create a downside cushion. The trade balances event-driven upside against structural media concerns and uses a strict stop to limit losses.
What would change our mind: if management materially lowers its 2026 political revenue expectations, withdraws dividend guidance, or reports Q1 bookings that show political revenue materially below the communicated floor, we would flip to neutral or bearish. Conversely, confirmation of strong political booking cadence or early signs that advertisers are shifting budgets back to local broadcast would reinforce our bullish stance and merit a target upgrade.
Trade summary: Long SBGI at $13.90, target $16.50, stop $12.75, mid term (45 trading days), risk level - medium.