Sabre's DCF Implies An Upside Potential Of 50%

Sep. 01, 2021 7:04 AM ETSabre Corporation (SABR) StockSABR11 Comments

Summary

  • Sabre Corp signs agreements with airlines, hoteliers, and other travel partners to distribute travel tickets.
  • In the last quarterly report, the company noted a meaningful improvement in bookings. Besides, the management noted that Sabre is learning a lot from the current crisis.
  • The management is making a technology transformation, which will help the company report larger revenue in the coming years.
  • In my opinion, the management believes that from 2023-2024, the company will be able to operate normally. I say this because the company decided to move all its contractual obligations from 2022 and 2023 to 2024, 2025, and 2027.
  • The present value of the sum of FCF from 2021 to 2025 is close to $1061.7 billion. I assumed a WACC of 10% and a terminal FCF of $689 million, which implied a valuation of $15.
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Sabre Corp (NASDAQ:SABR) is currently trading very undervalued because most investors have not learned about the future free cash flow expectations. The travel suppliers’ transaction volume is already increasing significantly, so I am expecting that the company will recover from the current

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I am an financial advisor living in Europe. I conduct due diligence for clients across multiple sectors. I hold more than 15 years of expertise.I only write about my opinion. Investing in securities involves risk of loss that readers should be prepared to bear. No investment process is free of risk; no strategy or risk management technique can guarantee returns or eliminate risk in any market environment.

Analyst’s Disclosure:I/we have a beneficial long position in the shares of SABR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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