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Telephone and Data Systems (TDS) Up on Q2 Earnings Beat
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Telephone and Data Systems, Inc. (TDS - Free Report) reported solid second-quarter 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Accretive subscriber base and broadband connections along with augmented footprint in international markets drove its performance despite lower store traffic stemming from the global pandemic. Post earnings release, shares were up 18.8% to close at $22.98 on Aug 7 supported by healthy earnings beat.
Net Income
Net income in the June quarter was $65 million or 56 cents per share compared with $33 million or 28 cents per share in the year-ago quarter. The two-fold rise in earnings can be primarily attributed to lower operating expenses on the back of flat year over year revenues. The bottom line surpassed the Zacks Consensus Estimate by 32 cents.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Quarterly total operating revenues aggregated $1,263 million, almost flat year over year despite uncertainties triggered by the coronavirus pandemic. The top line beat the consensus estimate of $1,204 million.
U.S. Cellular
By segments, operating revenues from U.S. Cellular were unchanged at $973 million, driven by higher demand of wireless products to meet the need for remote connectivity due to COVID-19 pandemic. Total operating expenses decreased to $920 million from $943 million due to lower expenses excluding depreciation and amortization. Operating income increased to $53 million from $30 million in the year-ago quarter. Postpaid average revenue per user improved to $46.24 from $45.90, while average revenue per account rose to $120.70 from $119.46. Prepaid average revenue per user increased to $34.89 from $34.43 in the prior-year quarter.
TDS Telecom
Operating revenues were $241 million, up 3.4% year over year primarily driven by higher cable revenues and augmented fiber footprint in international markets coupled with higher broadband connections. Revenues from wireline were $169 million, down 1.7% due to decline in commercial connections. Cable revenues were $71 million, up 14.5% year over year. The upside was primarily driven by the acquisition of Continuum in North Carolina and growth in residential connections.
Cash Flow & Liquidity
During the first six months of 2020, Telephone and Data Systems generated $806 million of net cash from operating activities compared with $592 million in the year-ago period. Free cash flow (non-GAAP) totaled $196 million in first half of the year compared with $199 million in the prior-year period. As of Jun 30, the company had $565 million in cash and equivalents with $2,487 million of net long-term debt. Notably, TDS repurchased 879,409 shares for $14 million in the first half of 2020.
2020 Guidance Reiterated
Despite uncertainties associated with the coronavirus pandemic, TDS Telecom and U.S. Cellular have kept the guidance for full-year 2020 unchanged.
For 2020, total operating revenues from TDS Telecom is expected in the range of $950-$1,000 million. Adjusted EBITDA is projected to be $290-$320 million and capital expenditure is estimated in the band of $300-$350 million. Adjusted OIBDA is anticipated to be $280-$310 million.
For 2020, total service revenues from U.S. Cellular are expected in the range of $3,000-$3,100 million. Adjusted EBITDA is projected to be $900-$1,025 million and capital expenditure is estimated in the band of $850-$950 million. Adjusted OIBDA is anticipated to be $725-$850 million.
Backed by diligent operational strategies, TDS Telecom continues to maintain a strong balance sheet with conservative financing strategy. Despite the lower store traffic owing to COVID-19 crisis, the company is currently focused on attracting new customers, adopting cost-saving initiatives, fiber fortification programs, network infrastructure advancement and steady 5G developments with robust demand for wired broadband services. With disciplined cable acquisitions, TDS Telecom aims to generate lucrative revenues with fiber deployment in out-of-territory expansion markets and rollout of TDS TV+, a Cloud TV platform, in its cable and wireline segments coupled with accretive connections in fixed wireless, prepaid and postpaid services.
Zacks Rank & Stocks to Consider
Telephone and Data Systems currently has a Zacks Rank #4 (Sell).
CMS Energy’s bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter earnings surprise of 9.2%, on average.
Entergy’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter earnings surprise of 11.2%, on average.
Portland General Electric’s bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter earnings surprise of 7.7%, on average.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Telephone and Data Systems (TDS) Up on Q2 Earnings Beat
Telephone and Data Systems, Inc. (TDS - Free Report) reported solid second-quarter 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Accretive subscriber base and broadband connections along with augmented footprint in international markets drove its performance despite lower store traffic stemming from the global pandemic. Post earnings release, shares were up 18.8% to close at $22.98 on Aug 7 supported by healthy earnings beat.
Net Income
Net income in the June quarter was $65 million or 56 cents per share compared with $33 million or 28 cents per share in the year-ago quarter. The two-fold rise in earnings can be primarily attributed to lower operating expenses on the back of flat year over year revenues. The bottom line surpassed the Zacks Consensus Estimate by 32 cents.
Telephone and Data Systems, Inc. Price, Consensus and EPS Surprise
Telephone and Data Systems, Inc. price-consensus-eps-surprise-chart | Telephone and Data Systems, Inc. Quote
Revenues
Quarterly total operating revenues aggregated $1,263 million, almost flat year over year despite uncertainties triggered by the coronavirus pandemic. The top line beat the consensus estimate of $1,204 million.
U.S. Cellular
By segments, operating revenues from U.S. Cellular were unchanged at $973 million, driven by higher demand of wireless products to meet the need for remote connectivity due to COVID-19 pandemic. Total operating expenses decreased to $920 million from $943 million due to lower expenses excluding depreciation and amortization. Operating income increased to $53 million from $30 million in the year-ago quarter. Postpaid average revenue per user improved to $46.24 from $45.90, while average revenue per account rose to $120.70 from $119.46. Prepaid average revenue per user increased to $34.89 from $34.43 in the prior-year quarter.
TDS Telecom
Operating revenues were $241 million, up 3.4% year over year primarily driven by higher cable revenues and augmented fiber footprint in international markets coupled with higher broadband connections. Revenues from wireline were $169 million, down 1.7% due to decline in commercial connections. Cable revenues were $71 million, up 14.5% year over year. The upside was primarily driven by the acquisition of Continuum in North Carolina and growth in residential connections.
Cash Flow & Liquidity
During the first six months of 2020, Telephone and Data Systems generated $806 million of net cash from operating activities compared with $592 million in the year-ago period. Free cash flow (non-GAAP) totaled $196 million in first half of the year compared with $199 million in the prior-year period. As of Jun 30, the company had $565 million in cash and equivalents with $2,487 million of net long-term debt. Notably, TDS repurchased 879,409 shares for $14 million in the first half of 2020.
2020 Guidance Reiterated
Despite uncertainties associated with the coronavirus pandemic, TDS Telecom and U.S. Cellular have kept the guidance for full-year 2020 unchanged.
For 2020, total operating revenues from TDS Telecom is expected in the range of $950-$1,000 million. Adjusted EBITDA is projected to be $290-$320 million and capital expenditure is estimated in the band of $300-$350 million. Adjusted OIBDA is anticipated to be $280-$310 million.
For 2020, total service revenues from U.S. Cellular are expected in the range of $3,000-$3,100 million. Adjusted EBITDA is projected to be $900-$1,025 million and capital expenditure is estimated in the band of $850-$950 million. Adjusted OIBDA is anticipated to be $725-$850 million.
Backed by diligent operational strategies, TDS Telecom continues to maintain a strong balance sheet with conservative financing strategy. Despite the lower store traffic owing to COVID-19 crisis, the company is currently focused on attracting new customers, adopting cost-saving initiatives, fiber fortification programs, network infrastructure advancement and steady 5G developments with robust demand for wired broadband services. With disciplined cable acquisitions, TDS Telecom aims to generate lucrative revenues with fiber deployment in out-of-territory expansion markets and rollout of TDS TV+, a Cloud TV platform, in its cable and wireline segments coupled with accretive connections in fixed wireless, prepaid and postpaid services.
Zacks Rank & Stocks to Consider
Telephone and Data Systems currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader industry include CMS Energy Corporation (CMS - Free Report) , Entergy Corporation (ETR - Free Report) and Portland General Electric Company (POR - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CMS Energy’s bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter earnings surprise of 9.2%, on average.
Entergy’s bottom line surpassed the Zacks Consensus Estimate in the last four quarters. The company has a trailing four-quarter earnings surprise of 11.2%, on average.
Portland General Electric’s bottom line surpassed the Zacks Consensus Estimate thrice in the last four quarters. The company has a trailing four-quarter earnings surprise of 7.7%, on average.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>