Liberty Global Plc – Value Analysis (NASDAQ:LBTYA) : April 27, 2017

Capitalcube gives Liberty Global Plc a score of 34.

Our analysis is based on comparing Liberty Global Plc with the following peers – Shaw Communications Inc. Class B, Charter Communications, Inc. Class A, DISH Network Corporation Class A and Rogers Communications Inc. Class B (SJR-US, CHTR-US, DISH-US and RCI-US).

Investment Outlook

Liberty Global Plc has a fundamental score of 34 and has a relative valuation of UNDERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (0.62) than its peer median (2.25).
  • The market expects LBTYA-US to grow more slowly than its peers and for its median ROE to decline.
  • LBTYA-US‘s relative asset efficiency and net profit margins are both around the median level.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • LBTYA-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • Company appears to give away relatively high gross margins to relatively high operating costs suggesting a differentiated product portfolio with low pre-tax margins relative to peers.
  • While LBTYA-US‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • LBTYA-US seems too levered to raise additional debt.

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Leverage & Liquidity

LBTYA-US would seem to have a hard time raising additional debt.

  • With debt at a relatively high 57.86% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 41.76%), and relatively tight interest coverage level of 1.19x, LBTYA-US would have a hard time raising much additional debt. The company has a Constrained profile in terms of its ability to take on further debt.
  • All 4 peers for the company have an outstanding debt balance.

LBTYA-US has maintained its Limited Flexibility profile from the prior year-end.

  • LBTYA-US‘s interest coverage is similar to its four-year average interest coverage of 1.07x.
  • Compared to 2015, interest coverage has remained relatively stable for both the company (1.19x) and the peer median (3.63x).
  • LBTYA-US‘s debt-EV continues to trend upward and is now similar to its four-year average debt-EV of 58.30%.
  • Though its debt-EV increased to 57.86% from 56.75% (in 2015), its peer median remained relatively stable during this period at 41.76%.
  • Relative to peers, debt-EV rose 1.40 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Shaw Communications Inc. Class B 30.98 0.63 3.82 31.03
Charter Communications, Inc. Class A 41.76 0.34 1.38 14.49
DISH Network Corporation Class A 42.91 1.83 41.73 19.21
Rogers Communications Inc. Class B 36.21 0.52 3.63 23.69
Liberty Global Plc Class A 57.86 0.73 1.19 14.12
Peer Median 41.76 0.63 3.63 19.21
Best In Class 30.98 1.83 41.73 31.03

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Company Profile

Liberty Global Plc is an international cable company that provides cable television and Internet services. It connects people to the digital world and enables them to discover and experience its endless possibilities. The company’s television, broadband Internet, and telephony services are provided through next-generation networks and innovative technology platforms that connect customers who subscribe to services. Its consumer brands include Virgin Media, Ziggo, UPC, Unitymedia, Telenet, and VTR. The company was founded on June 7, 2013 and is headquartered in London, the United Kingdom.

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