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U.S. Cellular: Strategies Strong, Stock Lags Industry Mark
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On Dec 16, we issued an updated research report on United States Cellular Corp. (USM - Free Report) – a subsidiary of Telephone & Data Systems Inc. (TDS - Free Report) .
What’s Driving U.S. Cellular?
We are impressed with U.S. Cellular’s strategic moves such as introduction of a new billing system, continuous rollout of 4G LTE, enhancement of LTE handsets, completion of various spectrum transactions and monetization of non-strategic assets. These moves might help the company gain subscribers and manage churn. The company is also striving to gain customers from rivals through online promotional plans and discount offers. U.S. Cellular is also optimistic about the growing demand for smartphones, which enjoy significant market penetration, supporting growth in data revenues. For 2016, the company expects total operating revenue in the band of $3.9–$4.1 billion. Moreover, the Shared Connect plans which offer more data, larger allotments and unlimited offerings in relation to calling and texting should help the company maintain its position in the wireless market.
Recently, Ericsson (ERIC - Free Report) and U.S. Cellular achieved peak speeds of 9Gbps at a distance of 787 feet and 1.5Gbps at a distance of one mile in 5G testing in Madison, WI.
Risks
Shares of U.S. Cellular have underperformed the Zacks categorized Wireless National industry on a year-to-date basis. The stock has gained 4.88% over the period, lagging the industry’s 21.55%.
Moreover, U.S. Cellular operates in an intensely competitive wireless market and is significantly challenged by lower-cost mobile service operators. On a regional level, the company competes with the likes of AT&T Inc. (T - Free Report) -owned Leap Wireless.
U.S. Cellular is also susceptible to aggressive pricing by larger rivals. In the third quarter of 2016, service revenues decreased 14% to $771 million. The company expects the pressure on service revenues to continue as more customers move to unsubsidized pricing. Further, consolidated wireless market, high costs associated with network integration and construction of cell sites are major dampeners.
To Conclude
We believe the company’s strategic and innovative plans bode well for long-term growth. However, multiple headwinds have been hurting the stock of late, resulting in U.S. Cellular’s Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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U.S. Cellular: Strategies Strong, Stock Lags Industry Mark
On Dec 16, we issued an updated research report on United States Cellular Corp. (USM - Free Report) – a subsidiary of Telephone & Data Systems Inc. (TDS - Free Report) .
What’s Driving U.S. Cellular?
We are impressed with U.S. Cellular’s strategic moves such as introduction of a new billing system, continuous rollout of 4G LTE, enhancement of LTE handsets, completion of various spectrum transactions and monetization of non-strategic assets. These moves might help the company gain subscribers and manage churn. The company is also striving to gain customers from rivals through online promotional plans and discount offers. U.S. Cellular is also optimistic about the growing demand for smartphones, which enjoy significant market penetration, supporting growth in data revenues. For 2016, the company expects total operating revenue in the band of $3.9–$4.1 billion. Moreover, the Shared Connect plans which offer more data, larger allotments and unlimited offerings in relation to calling and texting should help the company maintain its position in the wireless market.
Recently, Ericsson (ERIC - Free Report) and U.S. Cellular achieved peak speeds of 9Gbps at a distance of 787 feet and 1.5Gbps at a distance of one mile in 5G testing in Madison, WI.
Risks
Shares of U.S. Cellular have underperformed the Zacks categorized Wireless National industry on a year-to-date basis. The stock has gained 4.88% over the period, lagging the industry’s 21.55%.
Moreover, U.S. Cellular operates in an intensely competitive wireless market and is significantly challenged by lower-cost mobile service operators. On a regional level, the company competes with the likes of AT&T Inc. (T - Free Report) -owned Leap Wireless.
U.S. Cellular is also susceptible to aggressive pricing by larger rivals. In the third quarter of 2016, service revenues decreased 14% to $771 million. The company expects the pressure on service revenues to continue as more customers move to unsubsidized pricing. Further, consolidated wireless market, high costs associated with network integration and construction of cell sites are major dampeners.
To Conclude
We believe the company’s strategic and innovative plans bode well for long-term growth. However, multiple headwinds have been hurting the stock of late, resulting in U.S. Cellular’s Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>