Valuation VS PeersEBITDA for past several quarters has been around 165-225 million per quarter.
Q1 2011 was 195 million
Q2 2011 was 175 million
They spent $145 million in shareholder dividends first 6 months of 2011. That is now reduced to $16.73 million per quarter or savings of $55.77 million per quarter.
I estimate they are going to have EBITDA as follows:
Q3 est 2011 175 million + savings of 55.77 million = 230.77
Q4 est 2011 175 million + savings of 55.77 million = 230.77
So Full Year EBITDA will be around $831,540,000
Enterprise Value (takes into account all debt and equity) is approx $3.5 billion
2011 EV/EBITDA multiple = 3,500,000,000/831,540,000 = 4.21
2012 EV/EBITDA could be about 3.79
EV/EBITDA of Yellow Media peer group (main competitors) = 6.95
EV/EBITDA of Canadian market = 6.88
It is very fair to use this metric to find the bottom in YLO since this multiple takes into account all of the debt obligations, looks at the company as a private equity investor. YLO could get taken out since it is currently trading at a valuation of 60% of the industry group. Thats one of the reasons I think its a pretty good investment YLO or the A series prefs around this level, since the visibility is not that bad looking out 12 months, and then we take it from there. Good luck guys.