What is SABR's Intrinsic value?

Sabre Corp (SABR) Intrinsic Value Analysis

Executive Summary

As of June 2, 2025, Sabre Corp's estimated intrinsic value ranges from $1.34 to $6.53 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $6.53 +159.1%
Discounted Cash Flow (5Y) $1.34 -46.9%

Is Sabre Corp (SABR) undervalued or overvalued?

With the current market price at $2.52, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Sabre Corp's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 3.05 4.78
Cost of equity 17.9% 31.6%
Cost of debt 6.9% 15.6%
Tax rate 1.6% 1.8%
Debt/Equity ratio 5.18 5.18
After-tax WACC 8.6% 18.0%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 13.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $3,030 (FY12-2024) to $6,757 (FY12-2034)
  • Net profit margin expansion from -9% to 2%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $1 $4,985M 68.9%
10-Year Growth $7 $6,999M 50.4%
5-Year EBITDA $(1,234) $4,289M 63.9%
10-Year EBITDA $4 $6,138M 43.4%

Key Financial Metrics

Metric Value
Market Capitalization $977M
Enterprise Value $5444M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 6.90
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 5.18

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 55% $1.96
Discounted Cash Flow (5Y) 45% $0.33
Weighted Average 100% $4.17

Investment Conclusion

Based on our comprehensive valuation analysis, Sabre Corp's weighted average intrinsic value is $4.17, which is approximately 65.4% above the current market price of $2.52.

Key investment considerations:

  • Strong projected earnings growth (-9% to 2% margin)
  • Consistent cash flow generation

Given these factors, we believe Sabre Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.