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U.S. Cellular (USM) Beats Earnings & Revenue Estimates in Q4

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United States Cellular Corporation (USM - Free Report) reported healthy fourth-quarter 2021 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate.

Net Income

Net income in the quarter was $27 million or 31 cents per share compared with $5 million or 6 cents per share in the prior-year quarter. The improvement resulted from higher operating income, lower interest expense and income tax benefit. The bottom line beat the Zacks Consensus Estimate by 14 cents.

In 2021, net income was $155 million or $1.77 per share compared with $229 million or $2.62 per share in 2020.

Revenues

Quarterly total operating revenues slipped 0.5% year over year to $1,068 million due to lower equipment sales. Service revenues increased 0.8% to $782 million, which reflects growth in retail service revenues. Equipment sales declined 3.7% to $286 million. The top line, however, surpassed the consensus estimate of $1,060 million.

In 2021, revenues increased 2.1% year over year to $4,122 million.

Other Quarterly Details

Total operating expenses decreased 0.6% year over year to $1,063 million. Operating income was $5 million, up from $4 million. In 2021, adjusted EBITDA came in at $1,054 million and adjusted OIBDA was $869 million.

Operating Metrics

Total cell sites in service were 6,898 at the end of the reported quarter compared with 6,797 a year ago. The company-owned towers were 4,301, up from 4,271.

As of Dec 31, 2021, postpaid average revenue per user (ARPU) increased to $48.62 from $47.51 year over year, and postpaid average revenue per account grew to $127.14 from $124.87. Postpaid churn jumped to 1.35% from 1.21%. Prepaid ARPU decreased to $34.53 from $35.15, and prepaid churn increased to 4.39% from 4.24%.

Cash Flow & Liquidity

In 2021, U.S. Cellular generated $802 million of cash from operating activities compared with $1,237 million in 2020. As of Dec 31, 2021, the company had $156 million in cash and cash equivalents with $2,728 million of long-term debt.

Outlook

U.S. Cellular continues to make progress toward its strategic priorities in a competitive environment. While 5G and network modernization programs are on track, the company is optimistic about the use of the millimeter wave spectrum for fixed wireless access and its potential to serve rural customers.

U.S. Cellular has guided for 2022. The company expects service revenues in the band of $3,100-$3,200 million. It expects adjusted EBITDA in the range of $925-$1,075 million, and adjusted OIBDA within $750-$900 million. Capital expenditures are estimated between $700 million and $800 million.

Zacks Rank & Stocks to Consider

U.S. Cellular currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vocera Communications, Inc. (VCRA - Free Report) is a better-ranked stock in the broader Zacks Computer and Technology sector that sports a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has been revised upward by 4.9% over the past 60 days.

Vocera Communications pulled off a trailing four-quarter earnings surprise of 115.4%, on average. The stock has returned 73.7% in the past year.

SeaChange International, Inc. (SEAC - Free Report) carries a Zacks Rank #2 (Buy). The consensus estimate for current-year earnings has been revised upward by 10% over the past 60 days.

SeaChange International delivered a trailing four-quarter earnings surprise of 37.2%, on average. The stock has, however, declined 15.5% in the past year.

Qualcomm, Inc. (QCOM - Free Report) , carrying a Zacks Rank #2, is another solid pick for investors. The consensus estimate for current-year earnings has been revised 12.2% upward over the past 60 days.

Qualcomm delivered a trailing four-quarter earnings surprise of 12.2%, on average. It has appreciated 15.1% in the past year.