Sabre has gotten torched over the last six months - since December 2024, its stock price has dropped 31.2% to $2.65 per share. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Is there a buying opportunity in Sabre, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Sabre Will Underperform?
Despite the more favorable entry price, we're cautious about Sabre. Here are three reasons why there are better opportunities than SABR and a stock we'd rather own.
1. Weak Growth in Total Bookings Points to Soft Demand
Revenue growth can be broken down into changes in price and volume (for companies like Sabre, our preferred volume metric is total bookings). While both are important, the latter is the most critical to analyze because prices have a ceiling.
Sabre’s total bookings came in at 96.36 million in the latest quarter, and over the last two years, averaged 4.3% year-on-year growth. This performance was underwhelming and suggests it might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability. 
2. Breakeven Free Cash Flow Limits Reinvestment Potential
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Sabre broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.
3. Short Cash Runway Exposes Shareholders to Potential Dilution
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
Sabre burned through $16.28 million of cash over the last year, and its $5.12 billion of debt exceeds the $672.2 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.
Unless the Sabre’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.
We remain cautious of Sabre until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.
Final Judgment
We cheer for all companies serving everyday consumers, but in the case of Sabre, we’ll be cheering from the sidelines. After the recent drawdown, the stock trades at 14.5× forward P/E (or $2.65 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. There are more exciting stocks to buy at the moment. We’d suggest looking at one of our top digital advertising picks.
Stocks We Like More Than Sabre
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
