Shares of satellite-TV operator DISH Network Corporation (NASDAQ:DISH) tumbled to a 52-week low of $37.75 during the trading session on Mar 22. However, the figure recovered marginally to close at $37.77, down 3.3%.
In fact, the stock has not performed well in the past three months. Shares of DISH Network have lost 22.2% compared with the industry’s fall of 11.7% in the said time frame.
The stock also looks unattractive when compared with the market at large. The S&P 500 index gained 0.8% in the same time frame.
Reasons for the Underperformance
DISH Network continues to struggle with the persistent loss of subscribers due to stiff competition and cord-cutting in the pay-TV industry. On the one side, it is facing intense competition in the pay-tv market from rival players like AT&T (NYSE:T), Comcast Corporation (NASDAQ:CMCSA) and Charter Communications (NASDAQ:CHTR). On the other side, it is losing video subscribers to online video streaming providers such as Netflix (NASDAQ:NFLX) , Hulu.com, YouTube and others because of their extremely cheap source of TV programming.
At the end of 2017, DISH Network had 13.242 million pay-TV subscribers (down 3.1% y/y) of which DISH TV subscribers were 11.03 million (down 9.4% y/y). However, Sling TV subscribers were 2.212 million, up 47.4% y/y. This trajectory of subscriber losses in pay-TV is expected to continue in the upcoming quarters.
Meanwhile, DISH Network’s top-line growth continues to remain under pressure due to its failure to strike any deal with wireless operators to deploy a nationwide wireless network. The company’s prospects are likely to get affected by its failure to renew long-term programming contracts on favorable pricing and other economic terms. Also, escalating programming and content expenses and retransmission fees may dampen the company’s margins, going forward.
Downward Estimate Revisions
We note that the sales and earnings per share (EPS) estimates for DISH Network have moved down for the current quarter and full-year 2018.
Current quarter and full-year 2018 sales are estimated to decline 4.9% and 4%, respectively. Earnings are estimated to decline 7.9% for the current quarter and 3.2% in 2018.
The downward estimate revisions reflect pessimism over the prospects of this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Bearish Readings
ROC
Return on Capital (ROC) of DISH Network is 6.1% compared with 6.4% for the industry. This implies that the company generates a lower return on investment than its industry.
Debt-to-Equity Ratio
The debt-to-equity ratio is a good indicator of the financial well-being of a company. In terms of this metric, DISH Network seems to be a highly leveraged stock with a reading of 218.1% compared with 103.4% for the industry.
Stocks to Consider
Some better-ranked stocks in the broader Consumer Discretionary sector are Cable One Inc. (NYSE:CABO) and AMC Networks Inc. (NASDAQ:AMCX) . Both Cable One and AMC Networks carry a Zacks Rank #2 (Buy).
The projected earnings growth rate (3-5 years) for Cable One and AMC Networks is 3% and 7.4%, respectively.
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