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Dish (DISH) Down 3.2% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Dish Network (DISH - Free Report) . Shares have lost about 3.2% in that time frame, underperforming 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 Earnings Beat, Revenues Down Y/Y

DISH Network reported third-quarter 2019 earnings of 66 cents per share, beating the Zacks Consensus Estimate by 11.9%. The figure, however, declined 19.5% year over year.

Revenues also declined 6.7% year over year to $3.17 billion but surpassed the consensus mark by 0.9%.

The United States revenues declined 6.6% year over year to $3.16 billion. Canada and Mexico revenues decreased 21.9% from the year-ago quarter to $11.5 million.

DISH exited the reported quarter with 9.494 million DISH TV subscribers, down 7.7%, and 2.686 million Sling TV subscribers, up 13.3%. Total Pay-TV subscribers were 12.180 million, down 3.8% year over year.

Quarter Details

Subscriber-related revenues (98.4% of revenues) declined 6.9% from the year-ago quarter to $3.12 billion. Equipment sales and other revenues increased 11.8% to $51.2 million.

Pay-TV video and related revenues fell 6.6% to $3.17 billion. Broadband revenues dropped 23.6% year over year to $46.3 million.

The company added approximately 148K net Pay-TV subscribers in the reported quarter. DISH had lost roughly 341K net Pay-TV subscribers in the year-ago quarter.

Moreover, DISH added nearly 214K net Sling TV subscribers in the third quarter compared with 26K net Sling TV subscribers added in the year-ago quarter.

However, Pay-TV ARPU edged down 1.2% year over year to $85.29. Additionally, the churn rate was 1.69% compared with the year-ago quarter’s 2.11%.

In the third quarter, subscriber-related expenses declined 8.9% year over year to $1.93 billion. As percentage of revenues, subscriber-related expenses shrunk 150 basis points (bps) on a year-over-year basis to 61.1%.

Total subscriber acquisition costs (SACs) flared up 52.9% from the year-ago quarter to $285.8 million. As percentage of revenues, SACs expanded 350 bps to 9%.

DISH TV SAC was $827, up 14.7% year over year primarily due to rise in advertising, installation costs per activation and hardware costs.

EBITDA decreased 19.5% year over year to $597.4 million. EBITDA margin contracted 300 bps on a year-over-year basis to 18.9%.

Operating income fell 16.7% year over year to $468.9 million. Operating margin contracted 180 bps to 14.8%.

Balance Sheet

As of Sep 30, 2019, cash, cash equivalents and current marketable investment securities were $1.66 billion compared with $2.73 billion as of Jun 30, 2019.

How Have Estimates Been Moving Since Then?

Estimates review followed an upward path over the past two months. The consensus estimate has shifted 7.81% 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. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% 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 #3 (Hold). We expect an in-line return from the stock in the next few months.


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