It has been about a month since the last earnings report for Altice USA, Inc. (
ATUS Quick Quote ATUS - Free Report) . Shares have lost about 12.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Altice USA, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Altice's Q1 Earnings Beat Estimates, Revenues Falter Altice reported relatively modest first-quarter 2023 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same. However, both metrics declined year over year due to a challenging macroeconomic environment. Nevertheless, the company has been accelerating the pace of network rollouts and expects to enhance customer connection with its rebranding campaign, thereby reporting improved performance in the long run. Quarter Details
Net income in the quarter declined to $25.9 million or 6 cents per share from $196.6 million or 43 cents per share in the prior-year quarter, primarily due to top-line contraction. The bottom line, however, beat the Zacks Consensus Estimate by a penny.
Quarterly total revenues slipped to $2,294 million from $2,421.9 million in the prior year, owing to lower contributions from residential and advertising businesses due to macroeconomic uncertainty. The top line missed the consensus estimate of $2,323 million. The company made progress in its growth strategies by accelerating network enhancement and customer experience. At the quarter-end, Altice had 2.37 million FTTH (Fiber to the home) passings, about 214,000 of which were added in the January-March period. Broadband-only customer usage averaged 625 GB per month. FTTH broadband net additions were more than 38,000 in the quarter, led by increased migration of existing customers and higher fiber gross additions. Total fiber broadband customers reached 210,000 by the end of the quarter. Residential revenue per customer relationship declined 2.7% year over year to $134.16 due to the loss of higher ARPU video customers. Residential revenues (which include Broadband, Video and Telephony) were $1,805.3 million, down 5.6% year over year due to a loss in unique residential customers of more than 26,000. Business services and wholesale revenues declined to $363.5 million from $367.5 million. News and Advertising revenues were $98.7 million, down 13.9% due to lower contributions from both political and non-political campaigns. Other Quarterly Details
Operating income declined to $425.1 million from $512.5 million in the year-ago quarter. Adjusted EBITDA was $868.4 million compared with $991.7 million in the prior-year quarter. Altice rebranded its national mobile service dubbed Altice Mobile to Optimum Mobile as part of its effort to align all the services under a single national Optimum brand. The rechristened Optimum Mobile witnessed healthy subscriber growth during the quarter, reaching 248,000 customers, representing 5.4% penetration of the residential customer base.
Altice has been accelerating the pace of its network extension and remains well on track to reach more than 150,000 passings in 2023. The company is witnessing solid customer penetration, typically reaching approximately 40% within a year of rollout in new-build areas. Cash Flow & Liquidity
Altice generated $416.8 million of cash from operating activities in the first quarter compared with $600.2 million in the year-ago period. As of Mar 31, 2023, the company’s net debt was $24,846 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -52.38% due to these changes.
At this time, Altice USA, Inc. has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Altice USA, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Altice USA, Inc. belongs to the Zacks Communication - Components industry. Another stock from the same industry, Viav Solutions (
VIAV Quick Quote VIAV - Free Report) , has gained 7.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Viav Solutions reported revenues of $247.8 million in the last reported quarter, representing a year-over-year change of -21.5%. EPS of $0.08 for the same period compares with $0.22 a year ago.
Viav Solutions is expected to post earnings of $0.08 per share for the current quarter, representing a year-over-year change of -66.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -33.3%.
Viav Solutions has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.