A month has gone by since the last earnings report for Altice USA, Inc. (ATUS). Shares have added about 20.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Altice USA, Inc. 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 drivers.
Altice Q4 Earnings Miss Estimates on Lower Revenues
Altice reported mixed fourth-quarter 2023 results, with the top line surpassing the Zacks Consensus Estimate but the bottom line missing the same. The company reported a revenue decline year over year, owing to soft demand trends in the Residential, News and Advertising segments. However, growth in mobile line net additions, the company’s focus on network upgrades, improving customer care, AI integration and financial discipline are positive factors.
Net Income
Altice reported a net loss of $117.8 million or a loss of 26 cents per share compared with a loss of $193.1 million or 43 cents per share in the prior-year quarter. Income tax benefit and lower operating expenses led to a narrower loss during the quarter. The bottom line, however, missed the Zacks Consensus Estimate by 33 cents.
In 2023, net income was $53.2 million, down from $194.6 million in 2022.
Revenues
Total revenues in the quarter were $2.3 billion, down from $2.36 billion in the prior-year quarter. Declining net sales from broadband and video customers impeded the top line. However, the top line beat the consensus estimate by 13 million.
In 2023, net sales totaled $9.23 billion compared with $9.64 billion in 2022.
The company made progress in its growth strategies by accelerating network enhancement and customer experience. At the quarter-end, Altice had 2.73 million FTTH (Fiber to the home) passings, about 14,900 of which were added in the September-December period.
FTTH broadband net additions were more than 46,000 in the quarter, led by increased migration of existing customers and higher fiber gross additions. Total fiber broadband customers reached 341,000 by the end of the quarter. Residential average revenue per user (ARPU) improves marginally by 0.1% year over year to $136.01. Despite losses of video subscribers, greater mobile penetration, lower churn rate and AI implementation across care and retention centers supported the ARPU.
Business services and wholesale revenues increased to $372 million from $368.4 million in the year-ago quarter. The improvement was driven by growth in Lightpath revenues. Net sales surpassed our revenue estimate of $349.3 million.
News and Advertising revenues were $128.1 million, down from 151.8 million in the year-earlier quarter, owing to lower political advertising revenues. Net sales fell short of our revenue estimate of $157.9 million.
Residential revenues (which include Broadband, Video and Telephony) were $1.79 billion, down from $1.83 billion in the year-earlier quarter, primarily due to the loss of higher ARPU video customers. Net sales beat our estimate of $1.75 billion.
Other Quarterly Details
Operating income improved to $302.3 million from $301.1 million in the year-ago quarter. Adjusted EBITDA was $903.3 million compared with $913.3 million in the prior-year quarter. Optimum Mobile witnessed healthy subscriber growth during the quarter, reaching 322,000 customers, representing a 7.1% penetration of the company’s total broadband customer base.
Altice’s total passings grew more than 165,000 and reached 9.6 million at the end of the full year 2023. The company is witnessing solid customer penetration, typically reaching approximately 40% within a year of rollout in new-build areas.
Cash Flow & Liquidity
In 2023, Altice generated $1.82 billion of cash from operating activities compared with $2.36 billion in 2022. As of Dec 31, 2023, the company’s net debt was $24.82 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -108.7% due to these changes.
VGM Scores
At this time, Altice USA, Inc. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Altice USA, Inc. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Altice USA, Inc. belongs to the Zacks Communication – Components industry. Another stock from the same industry, Arista Networks (ANET), has gained 6.6% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Arista Networks reported revenues of $1.54 billion in the last reported quarter, representing a year-over-year change of +20.8%. EPS of $2.08 for the same period compares with $1.41 a year ago.
Arista Networks is expected to post earnings of $1.73 per share for the current quarter, representing a year-over-year change of +21%. Over the last 30 days, the Zacks Consensus Estimate has changed +1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Arista Networks. Also, the stock has a VGM Score of C.
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