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EchoStar (SATS) to Report Q1 Earnings: What's in the Offing?

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EchoStar Corporation (SATS - Free Report) is scheduled to report first-quarter 2020 results on May 7, before the opening bell. In the last reported quarter, the company posted a negative earnings surprise of 1,100%.

The Englewood, CO-based satellite communication solutions provider is expected to have recorded lower revenues year over year. This is probably because of an increase in churn rate with declining enterprise services, despite a strong defense and government business, resulting in lower ARPU.

Let’s discuss the factors that are likely to get reflected in the upcoming quarterly announcement.

Factors at Play

EchoStar offers secure communications technologies through its Hughes Network Systems and EchoStar Satellite Services business segments. Hughes and Al Yah Satellite Communications Company, a leading global satellite operator based in the United Arab Emirates and wholly-owned by Mubadala Investment Company, commenced a joint venture to provide satellite broadband services in Brazil. Hughes added the VMware SD-WAN powered by the VeloCloud platform to its HughesON Managed SD-WAN portfolio for enterprise customers.

During the quarter under review, Hughes and ERT, one of NOAA’s largest science and technology contractors, was selected by the National Weather Service (NWS) to upgrade managed satellite and wireless services at NWS locations in the contiguous United States, Hawaii, Alaska and Pacific Region. The company’s quarterly performance is expected to have benefited from these developments.

Hughes is deploying Express Wi-Fi Hotspots, powered by Facebook Connectivity’s Express Wi-Fi platform, in as many as 4,000 rural communities in Mexico in collaboration with Telecomunicaciones de Mexico, a decentralized body under the Mexico Secretariat of Communications and Transportation. Hughes implemented 1,000 Express Wi-Fi hotspots in Brazil, Colombia, Mexico and Peru.

Hughes unveiled a new suite of innovations that advance connectivity beyond single-transport services, yielding smart solutions for small business, enterprise, aeronautical and military applications. Hughes became a worldwide distribution partner for OneWeb, a global communications company. OneWeb’s constellation of Low Earth Orbit satellites has expanded Hughes’ service offerings to ensure that its customers can access low-latency and high-speed connectivity. Applications include enterprise and government networking, cellular backhaul and community Wi-Fi hotspots. The company’s performance is expected to have benefited from these factors in the to-be-reported quarter.

Hughes secured a Data Link Modernization contract from General Atomics Aeronautical Systems to provide advanced satellite communications (SATCOM) systems for the U.S. Army’s MQ-1C Gray Eagle Unmanned Aircraft System. Hughes was selected by the U.S. Naval Air Systems to provide SATCOM systems integration for the U.S. Coast Guard on its HC-27J aircraft.

Despite all these positives, for the March quarter, the Zacks Consensus Estimate for total revenues is pegged at $444 million that indicates a decline of 16.4% from the year-ago quarter’s reported figure. The consensus mark for adjusted loss per share is pegged at 24 cents, which calls for a deterioration of 260% from the prior-year quarter’s recorded figure.

What Our Model Says

Our proven model doesn’t conclusively predict an earnings beat for EchoStar this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: EchoStar’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at a loss of 24 cents.

EchoStar Corporation Price and EPS Surprise

 

 

Zacks Rank: EchoStar currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.

The Hain Celestial Group, Inc. (HAIN - Free Report) is slated to release third-quarter fiscal 2020 results on May 7. It has an Earnings ESP of +9.24% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Inphi Corporation (IPHI - Free Report) is scheduled to release first-quarter 2020 results on May 7. The company has an Earnings ESP of +20.04% and a Zacks Rank #2.

Adamas Pharmaceuticals, Inc. (ADMS - Free Report) has an Earnings ESP of +19.79% and carries a Zacks Rank of 2. The company is set to report first-quarter 2020 results on May 7.

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