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DISH Network (DISH) Down 9.4% Since Earnings Report: Can It Rebound?

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More than a month has gone by since the last earnings report for DISH Network Corporation (DISH - Free Report) . Shares have lost about 9.4% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted 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.

DISH Network Q2 Earnings & Revenues Miss Estimates

DISH Network’s second-quarter 2017 net income came in at $40.1 million or $0.09 per share compared with $424.1 million or $0.91 in the year-ago quarter. Second quarter adjusted earnings per share of $0.69 fell below the Zacks Consensus Estimate of $0.76.

Revenue

Total revenue in the reported quarter was approximately $3,643.6 million, down 5.7% year over year and lagging the Zacks Consensus Estimate of $3,717 million.

In the second quarter of 2017, segment-wise, subscriber-related revenues grossed $3,614.3 million, down 5.5% year over year. Equipment sales & other revenues totaled $29.4 million, down 23.5% year over year.

Operating Metrics

In the reported quarter, operating expenses were a little over $3,391.5 million, up 5.2% year over year. Operating income was $252.1 million compared with $640.3 million in the year-ago quarter. EBITDA in the second quarter of 2017 was $448.3 million compared with $911.3 million in the prior-year quarter.

Cash Flow

In the first half of 2017, DISH Network generated $1,493.1 million of cash from operations compared with $1,591.7 million in the prior-year period. Free cash flow in the reported period was $828.3 million compared with $866.8 million in the year-ago period.

Liquidity

At the end of the second quarter of 2017, DISH Network had $2,386.5 million of cash and marketable securities and $18,146.8 million of outstanding debt on its balance sheet compared with $5,359.3 million and $16,478.9 million, respectively, at the end of 2016. The debt-to-capitalization ratio at the end of the reported quarter was 0.78 compared with 0.77 at 2016-end.

Subscriber Statistics

As of Jun 30, 2017, DISH Network had approximately 13.332 million pay-TV subscribers, down 1.9% year over year.  The company lost a net 196,000 pay-TV subscribers in the reported quarter compared with a loss of 281,000 in the year-ago quarter.

Moreover, DISH Network lost 46,000 broadband subscribers in the reported quarter compared with a loss of 15,000 in the year-ago quarter. As of Jun 30, 2017, DISH Network had 509,000 broadband subscribers, down 17% year over year.

Pay-TV churn rate in the second quarter of 2017 was 1.59% compared with 1.96% in the year-ago quarter. Pay-TV ARPU (average revenue per user) was $87.25 compared with $89.98 in the year-ago quarter. Pay-TV average subscriber acquisition cost was $690 compared with $756 in the year-ago quarter.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.

DISH Network Corporation Price and Consensus

VGM Scores

At this time, DISH Network's stock has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. The stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

The company's stock is suitable solely for value investors based on our style scores.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.




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