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Altice USA (ATUS) Up 19.7% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Altice USA, Inc. (ATUS - Free Report) . Shares have added about 19.7% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is ATUS due for a pullback? 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 catalysts.

Altice Reports Wider-Than-Expected Loss in Q1

Altice posted a wider-than-expected loss in first-quarter 2018.

Bottom- and Top-Line Performances

The company reported a loss of 16 cents per share in the first quarter, wider than the Zacks Consensus Estimate of a loss of 13 cents per share. The reported loss is also wider than the loss of 12 cents per share posted in the year-ago quarter.

Revenues in the reported quarter came in at $2,329.7 million, missing the Zacks Consensus Estimate of $2,338 million. However, the top line inched up 1.2% year over year.

Broadband sales were $701.6 million, up 12.1% year over year. Business services and wholesale revenues came in at $333.1 million, up 4.3% year over year. Advertising sales in the quarter totaled $87.6 million, up 5.1% year over year. However, Pay TV revenues came in at $1,033.7 million, down 4.6% year over year. Telephony sales in the reported quarter were $166 million, down 8.2% year over year. Other sales came in at $7.7 million, slipping 12% year over year.  

Other Financial Details

Quarterly operating income was $313 million compared with $250.1 million posted in the year-ago quarter. Adjusted EBITDA grew 4% year over year in first-quarter 2018 to $981 million. Quarterly adjusted EBITDA margin was 42.1%, up 110 basis points year over year.

Operating free cash flow for Altice in the first quarter grew 5.4% year over year to $723 million.

Capital expenditure was $216.7 million, up 33% year over year. At the end of the first three months of 2018, the company’s outstanding debt came in at $20.6 billion, down $175 million from the end of 2017.

Guidance

Altice anticipates revenues to be up 2.5-3% year over year in 2018. The company also reiterated the plan to expand its adjusted EBITDA and cash flow margins, over the medium to long term.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month. There has been one revision higher for the current quarter compared to two lower. In the past month, the consensus estimate has shifted by 62.5% due to these changes.

VGM Scores

At this time, ATUS has an average Growth Score of C, however its Momentum is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Our style scores indicate that the stock is more suitable for momentum investors than growth investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, ATUS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.




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