A month has gone by since the last earnings report for Altice USA, Inc. (ATUS). Shares have lost about 26.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Altice USA, Inc. 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 drivers.
Altice Q4 Earnings & Revenues Fall Short of Estimates
Altice reported soft fourth-quarter 2022 results, wherein the bottom line and the top line missed the respective Zacks Consensus Estimate and declined year over year due to a challenging macroeconomic environment. Nevertheless, the company has been accelerating the pace of network rollouts and expects to enhance customer connection with its rebranding campaign, thereby reporting improved performances in the long run.
Net Loss
Net loss in the quarter was $193.1 million or a loss of 43 cents per share against net income of $251.7 million or 56 cents per share in the prior-year quarter, primarily due to top-line contraction. The bottom line missed the Zacks Consensus Estimate by 65 cents.
In 2022, net income declined to $194.6 million or 43 cents per share from $990.3 million or $2.14 per share in 2021.
Revenues
Quarterly total revenues slipped to $2,369.2 million from $2,521.1 million in the prior year, owing to lower contributions from residential and advertising businesses due to macroeconomic uncertainty. The top line missed the consensus estimate of $2,414 million. In 2022, total revenues were $9,647.7 million, down from 10,090.8 million in 2021.
The company made progress in its growth strategies by accelerating network enhancement and customer experience. At quarter-end, Altice had 2.16 million FTTH (Fiber to the home) passings, about 251,000 of which were added in the quarter. Broadband-only customer usage averaged 564 GB per month. FTTH broadband net additions were more than 36,000 in the quarter, led by increased migration of existing customers and higher fiber gross additions. Total fiber broadband customers reached 172,000 by the end of the quarter. Residential revenue per customer relationship declined 2.2% year over year to $134.76 due to the loss of higher ARPU video customers.
Residential revenues (which include Broadband, Video and Telephony) were $1,821.9 million, down 5% year over year due to a loss in unique residential customers of 16,000 and a broadband net loss of 8,000. Business services and wholesale revenues declined to $368.3 million from $406 million. News and Advertising revenues were $151.8 million, down 10.8% due to lower contributions from both political and non-political campaigns.
Other Quarterly Details
Operating income declined to $301.1 million from $598.8 million in the year-ago quarter. Adjusted EBITDA was $913.3 million compared with $1,083 million in the prior-year quarter. Altice rebranded its national mobile service dubbed Altice Mobile to Optimum Mobile as part of its effort to align all the services under a single national Optimum brand. The rechristened Optimum Mobile witnessed healthy subscriber growth during the quarter, reaching 240,000 customers, representing 5.6% penetration of the residential customer base.
Cash Flow & Liquidity
Altice generated $2,366.9 million of cash from operating activities in 2022 compared with $2,854.1 million in 2021. Free cash flow in 2022 was $452.6 million, down 72.1% year over year. As of Dec 31, 2022, the company’s net debt was $24,612 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -74.29% due to these changes.
VGM Scores
At this time, Altice USA, Inc. has a subpar Growth Score of D, a grade with the same score on the momentum front. 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 C. 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. It’s no surprise Altice USA, Inc. has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Altice USA, Inc. is part of the Zacks Communication – Components industry. Over the past month, Arista Networks (ANET), a stock from the same industry, has gained 23.8%. The company reported its results for the quarter ended December 2022 more than a month ago.
Arista Networks reported revenues of $1.28 billion in the last reported quarter, representing a year-over-year change of +54.7%. EPS of $1.41 for the same period compares with $0.82 a year ago.
Arista Networks is expected to post earnings of $1.34 per share for the current quarter, representing a year-over-year change of +59.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.3%.
Arista Networks has a Zacks Rank #1 (Strong Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.
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Altice USA, Inc. (ATUS) : Free Stock Analysis Report
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