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Dish (DISH) Down 0.5% Since Last Earnings Report: Can It Rebound?

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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 0.5% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important catalysts.

DISH Network Q3 Results Hurt By Subscriber Loss, Lower ARPU

DISH Network reported third-quarter 2018 earnings of 82 cents per share that comfortably surpassed the Zacks Consensus Estimate of 67 cents. The figure jumped 43.9% from the year-ago quarter.

However, revenues slumped 5.3% year over year to $3.395 billion. The figure beat the Zacks Consensus Estimate of $3.391 billion.

The decline was primarily attributed to lower subscriber base and the decrease in Pay-TV average revenue per user (ARPU). Pay-TV ARPU was $86.29, better than $85.54 reported in the previous quarter but lower than $87.23 in the year-ago quarter.

Pay-TV Subscriber Loss Continues

DISH exited the reported quarter with 10.286 million DISH TV subscribers and 2.370 million Sling TV subscribers. Total Pay-TV subscribers were 12.656 million in the United States, down from 12.997 million in the previous quarter and 13.203 million a year ago.

Net Pay-TV subscribers declined approximately 341K. The number was much higher than 151K subscribers lost in the previous quarter. The company had added 16K subscribers in the year-ago quarter.

Moreover, the company lost 367K net DISH TV subscribers in the quarter. The number was higher than 192K subscribers lost in the previous quarter and 220K in the year-ago quarter.

Sling TV subscribers increased 26K. However, the number is much lower than 41K added in the previous quarter. The company attributed the slowdown in subscriber addition to intensifying competition from the likes of Netflix, Hulu, HBO, Amazon and other digital media providers.

DISH TV's average monthly subscriber churn rate was 2.11%, worse than 1.46% reported in the previous quarter and 1.82% in the year-ago quarter. Churn rate was negatively impacted by Univision’s removal of certain of its channels from the company’s programming line-up.

Segment Details

Subscriber-related revenues (98.7% of revenues) declined 5.7% from the year-ago quarter to $3.349 billion.

Pay-TV video and related revenues fell 4.9% to $3.288 billion. Broadband revenues plunged 33.9% year over year to $60.6 million.

Equipment sales and other revenues surged 41.3% to $45.8 million.

The United States contributed 99.6% of revenues, declining 5.4% year over year to $3.380 billion. Canada and Mexico contributed the rest of the revenues, surging 25.2% from the year-ago quarter to $14.7 million.

Operating Details

In the third quarter, subscriber-related expenses declined 5.1% year over year to $2.123 billion. However, as percentage of revenues, subscriber-related expenses increased 10 basis points (bps) on a year-over-year basis to 62.6%.

Total subscriber acquisition costs (SACs) plunged 41.4% from the year-ago quarter to $186.9 million. As percentage of revenues, SACs declined 340 bps to 5.5%. DISH TV SAC was $721 down from $750 reported in the year-ago quarter.

EBITDA increased 9.1% year over year to $742.6 million.

Operating income surged 25.3% year over year to $562.7 million. Operating margin expanded 400 bps to 16.6% in the reported quarter.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 9.34% due to these changes.

VGM Scores

At this time, Dish has a subpar Growth Score of D, however its Momentum Score is doing a lot 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 20% 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.

Outlook

Dish has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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