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Why Is Dish (DISH) Down 1.5% Since Last Earnings Report?

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It has been about a month since the last earnings report for Dish Network (DISH - Free Report) . Shares have lost about 1.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Dish due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

DISH Network Q2 Earnings Beat, User Base Declines Y/Y

DISH Network’s second-quarter 2020 earnings of 78 cents per share beat the Zacks Consensus Estimate by 36.8% and also surged 30% year over year.

Revenues declined 0.8% year over year to $3.19 billion but surpassed the consensus mark of $3.10 billion.

U.S. revenues climbed 0.6% year over year to $3.18 billion. Canada and Mexico revenues plunged 52.7% from the year-ago quarter to $5.1 million.

DISH exited the reported quarter with 9.017 million DISH TV subscribers, down 5.7%, and 2.255 million Sling TV subscribers, down 8.8%. Total Pay-TV subscribers were 11.272 million, down 6.3% year over year.

It goes without saying that coronavirus adversely impacted DISH’s second-quarter results. The pandemic caused severe disruptions in certain commercial segments served by the company, including the hospitality and airline industries.

Markedly, DISH paused services or provided temporary rate relief for roughly 250,000 commercial accounts and removed those accounts from its ending Pay-TV subscriber count as of Mar 31, 2020. During the reported quarter, 45,000 of these subscribers resumed normal service and they were added to the DISH TV subscriber count as of Jun 30, 2020.

Top-Line Details

Subscriber-related revenues (98.8% of revenues) decreased 0.4% from the year-ago quarter to $3.15 billion. Equipment sales and other revenues plunged 23.5% to $37.3 million.

Pay-TV video and related revenues stayed at $3.12 billion. Equipment sales and other revenues fell 23.5% year over year to $37.3 million. Moreover, broadband revenues dropped 28.6% year over year to $32.5 million.

The company lost 96K net Pay-TV subscribers in the reported quarter compared with 31K lost a year ago. Moreover, DISH lost nearly 56K net Sling TV subscribers and 40K DISH TV subscribers.

However, Pay-TV ARPU increased 6.8% year over year to $92.17. Additionally, the churn-out rate was 1.14% compared with the year-ago quarter’s 1.48%.

Operating Details

In the second quarter, subscriber-related expenses dipped 5.8% year over year to $1.88 billion. As a percentage of revenues, subscriber-related expenses declined 320 basis points (bps) on a year-over-year basis to 59.1%.

Subscriber-acquisition costs (“SACs”) were down 16.1% from the year-ago quarter to $199.7 million. As a percentage of revenues, SACs contracted 110 bps to 6.3%.

DISH TV SAC increased 6.1% year over year.

EBITDA increased 36.1% year over year to $761.7 million. Operating income also surged 48% year over year to $637.7 million.

Balance Sheet

As of Jun 30, 2020, DISH Network had cash, cash equivalents and current marketable investment securities of $2.63 billion compared with $2.83 billion as of Mar 31, 2020.

Total debt as of Jun 30, 2020 was $13.06 billion compared with $14.15 billion as of Mar 31, 2020.

How Have Estimates Been Moving Since Then?

It turns out, estimates review flatlined during the past month. The consensus estimate has shifted 33.6% due to these changes.

VGM Scores

Currently, Dish has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Dish has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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