Sphere Entertainment Co. Class A Common Stock (SPHR)

FairStock Score: 25/100 — RISKY

Key Financials

Strengths

• Generates $336 million in annual free cash flow (7.4% yield on market cap)
• Strong Piotroski F-Score of 8/9 indicating robust financial health across profitability, leverage, and efficiency metrics
• Conservative balance sheet with debt-to-equity of just 0.43, providing financial flexibility

Concerns

• Trades significantly above Graham Number ($32) with negative 295% margin of safety—limited downside protection
• Altman Z-Score of 1.5 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Sphere Entertainment Co. Class A Common Stock is a small-cap communication services company valued at $4.5 billion. The business generates $1.2 billion in annual revenue with a 4.7% net margin and $336 million in free cash flow. From a quality standpoint, Sphere shows near-perfect Piotroski F-Score of 8/9 indicating exceptional financial health and distressed Altman Z-Score of 1.5 warrants caution. On valuation, the stock is commanding a steep 172.8x multiple, with trades far above its Graham Number ($32) with no margin of safety. Our composite FairStock Score of 25/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $336 million in annual free cash flow (7.4% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 173x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer