Which Market Offer More Value? – Sinclair Broadcast Group, Inc. (SBGI), Lululemon Athletica Inc. (LULU)

The shares of Sinclair Broadcast Group, Inc. have decreased by more than -21.40% this year alone. The shares recently went up by 2.23% or $0.65 and now trades at $29.75. The shares of Lululemon Athletica Inc. (NASDAQ:LULU), has jumped by 19.30% year to date as of 04/16/2018. The shares currently trade at $93.76 and have been able to report a change of 4.60% over the past one week.

The stock of Sinclair Broadcast Group, Inc. and Lululemon Athletica Inc. were two of the most active stocks on Monday. Investors seem to be very interested in what happens to the stocks of these two companies but do investors favor one over the other? We will analyze the growth, profitability, risk, valuation, and insider trends of both companies and see which one investors prefer.

Profitability and Returns

Growth alone cannot be used to see if the company will be valuable. Shareholders will be the losers if a company invest in ventures that aren’t profitable enough to support upbeat growth. In order for us to accurately measure profitability and return, we will be using the EBITDA margin and Return on Investment (ROI), which balances the difference in capital structure. SBGI has an EBITDA margin of 26.74%, this implies that the underlying business of SBGI is more profitable. The ROI of SBGI is 18.90% while that of LULU is 19.70%. These figures suggest that LULU ventures generate a higher ROI than that of SBGI.

Cash Flow

The value of a stock is ultimately determined by the amount of cash flow that the investors have available. Over the last 12 months, SBGI’s free cash flow per share is a positive 4.32, while that of LULU is positive 11.55.

Liquidity and Financial Risk

The ability of a company to meet up with its short-term obligations and be able to clear its longer-term debts is measured using Liquidity and leverage ratios. The current ratio for SBGI is 2.40 and that of LULU is 4.90. This implies that it is easier for SBGI to cover its immediate obligations over the next 12 months than LULU. The debt ratio of SBGI is 2.65 compared to 0.00 for LULU. SBGI can be able to settle its long-term debts and thus is a lower financial risk than LULU.


SBGI currently trades at a forward P/E of 11.45, a P/B of 1.93, and a P/S of 1.12 while LULU trades at a forward P/E of 26.70, a P/B of 7.95, and a P/S of 4.81. This means that looking at the earnings, book values and sales basis, SBGI is the cheaper one. It is very obvious that earnings are the most important factors to investors, thus analysts are most likely to place their bet on the P/E.

Analyst Price Targets and Opinions

The mistake some people make is that they think a cheap stock has more value to it. In order to know the value of a stock, there is need to compare its current price to its likely trading price in the future. The price of SBGI is currently at a -41.33% to its one-year price target of 50.71. Looking at its rival pricing, LULU is at a 4.26% relative to its price target of 89.93.

When looking at the investment recommendation on say a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell), SBGI is given a 1.60 while 2.20 placed for LULU. This means that analysts are more bullish on the outlook for LULU stocks.

Insider Activity and Investor Sentiment

Short interest or otherwise called the percentage of a stock’s tradable shares currently being shorted is another data that investors use to get a handle on sentiment. The short ratio for SBGI is 10.75 while that of LULU is just 2.44. This means that analysts are more bullish on the forecast for LULU stock.


The stock of Sinclair Broadcast Group, Inc. defeats that of Lululemon Athletica Inc. when the two are compared, with SBGI taking 6 out of the total factors that were been considered. SBGI happens to be more profitable, generates a higher ROI, has higher cash flow per share, higher liquidity and has a lower financial risk. When looking at the stock valuation, SBGI is the cheaper one on an earnings, book value and sales basis. Finally, the sentiment signal for SBGI is better on when it is viewed on short interest.

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