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Altice USA (ATUS) Stock Declines 28% in 6 Months: Here's Why
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Shares of Altice USA, Inc. (ATUS - Free Report) have lost 28% in the past six months, significantly underperforming its industry’s gain of 2.8%.
Reasons Behind the Price Plunge
Altice USA operates in a highly competitive industry against a variety of broadband communications companies, wireless data, pay television and telephony providers and video content providers. This is a matter of concern as such a market is highly dependent on consumer choices. Consumers’ selection of an alternate source of service, due to economic constraints, technological advances or preference, are hurting the demand for the company’s services.
Further, higher programming costs and other operating expenses are likely to affect margins going forward. Altice USA’s programming costs increased 4.7% year over year in fourth-quarter 2017, primarily due to an increase in contractual programming rates, partially offset by a decrease in video customers.
Moreover, since the acquisitions of Suddenlink and Optimum, Altice USA has renewed its programming contracts, which represents more than 70% of its annual programming expense. In the reported quarter, Optimum’s programming costs increased 3.3% to $476 million and Suddenlink’s programming costs increased 8.8% to $160 million, both on a year-over-year basis. We continue to expect programming costs per customer to increase in the upcoming quarters.
Other Bearish Readings
ROC and ROE
Return on Capital (ROC) of Altice USA is 0.1% compared with 4.7% for the industry. This implies that the company generates a lower return on investment than its industry.
Return on Equity (ROE) is a measure of a company’s efficiency in utilizing shareholders’ funds. Altice USA’s trailing 12-month ROE undercuts its growth potential. The stock’s current ROE stands at 0.3% compared with the industry’s ROE of 9.5%.
Debt-to-Equity Ratio
The debt-to-equity ratio is a good indicator of the financial well-being of a company. To this end, Altice USA seems to be a highly leveraged stock with a reading of 388.4% compared with 109.5% for the industry.
Furthermore, the stock has a VGM Score of C, which dampens its appeal. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Some better-ranked stocks in the broader Computer and Technology sector include United States Cellular (USM - Free Report) , Harris Corporation and Intel Corporation (INTC - Free Report) . While United States Cellular sports a Zacks Rank #1, Harris and Intel carry a Zacks Rank of #2 (Buy).
The projected earnings growth rate (3-5 years) for United States Cellular, Harris and Intel is 1%, 6% and 8.4%, respectively.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
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Altice USA (ATUS) Stock Declines 28% in 6 Months: Here's Why
Shares of Altice USA, Inc. (ATUS - Free Report) have lost 28% in the past six months, significantly underperforming its industry’s gain of 2.8%.
Reasons Behind the Price Plunge
Altice USA operates in a highly competitive industry against a variety of broadband communications companies, wireless data, pay television and telephony providers and video content providers. This is a matter of concern as such a market is highly dependent on consumer choices. Consumers’ selection of an alternate source of service, due to economic constraints, technological advances or preference, are hurting the demand for the company’s services.
Further, higher programming costs and other operating expenses are likely to affect margins going forward. Altice USA’s programming costs increased 4.7% year over year in fourth-quarter 2017, primarily due to an increase in contractual programming rates, partially offset by a decrease in video customers.
Moreover, since the acquisitions of Suddenlink and Optimum, Altice USA has renewed its programming contracts, which represents more than 70% of its annual programming expense. In the reported quarter, Optimum’s programming costs increased 3.3% to $476 million and Suddenlink’s programming costs increased 8.8% to $160 million, both on a year-over-year basis. We continue to expect programming costs per customer to increase in the upcoming quarters.
Other Bearish Readings
ROC and ROE
Return on Capital (ROC) of Altice USA is 0.1% compared with 4.7% for the industry. This implies that the company generates a lower return on investment than its industry.
Return on Equity (ROE) is a measure of a company’s efficiency in utilizing shareholders’ funds. Altice USA’s trailing 12-month ROE undercuts its growth potential. The stock’s current ROE stands at 0.3% compared with the industry’s ROE of 9.5%.
Debt-to-Equity Ratio
The debt-to-equity ratio is a good indicator of the financial well-being of a company. To this end, Altice USA seems to be a highly leveraged stock with a reading of 388.4% compared with 109.5% for the industry.
Furthermore, the stock has a VGM Score of C, which dampens its appeal. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three scores.
Zacks Rank & Key Picks
Altice USA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Computer and Technology sector include United States Cellular (USM - Free Report) , Harris Corporation and Intel Corporation (INTC - Free Report) . While United States Cellular sports a Zacks Rank #1, Harris and Intel carry a Zacks Rank of #2 (Buy).
The projected earnings growth rate (3-5 years) for United States Cellular, Harris and Intel is 1%, 6% and 8.4%, respectively.
Can Hackers Put Money INTO Your Portfolio?
Earlier this month, credit bureau Equifax announced a massive data breach affecting 2 out of every 3 Americans. The cybersecurity industry is expanding quickly in response to this and similar events. But some stocks are better investments than others.
Zacks has just released Cybersecurity! An Investor’s Guide to help Zacks.com readers make the most of the $170 billion per year investment opportunity created by hackers and other threats. It reveals 4 stocks worth looking into right away.
Download the new report now>>