A month has gone by since the last earnings report for Altice USA, Inc. (NYSE:ATUS) . Shares have lost about 3% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is ATUS due for a breakout? 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 USA Earnings and Revenues Top Estimates in Q4
Altice USA delivered better-than-expected financial results for the fourth quarter of 2017. Both the top and bottom line outpaced the Zacks Consensus Estimate.
Net Income
On a GAAP basis, net income in the fourth quarter was $2,235.8 million or $3.06 per share against a net loss of $236.7 million or a loss of 36 cents per share in the prior-year quarter. However, it reported adjusted earnings per share of break-even, better than the Zacks Consensus Estimate of a loss of a penny per share.
Revenue
Quarterly total revenues of $2,365.4 million increased 2.6% year over year and surpassed the Zacks Consensus Estimate of $2,355.2 million. Pay-TV revenues were $1,029.1 million, down 2.8% year over year. Broadband revenues were $676.5 million, up 13.1%. Telephony revenues were $199.9 million, down 7%. Business services and wholesale segment revenues were $330.5 million, up 5.1%. Advertising revenues were $121.7 million, up 9.9%. Other revenues were $7.6 million, down 13.9% year over year.
Operating Metrics
Quarterly operating income was $225.5 million compared with $217.2 million in the year-ago quarter. Adjusted EBITDA grew 12.2% year over year in fourth-quarter 2017 to $1,043.3 million. Quarterly adjusted EBITDA margin was 44.1% compared with 40.3% in the prior-year quarter.
Cash Flow
Operating free cash flow for Altice USA in the fourth quarter grew 19.6% year over year to $815 million. Operating free cash flow growth rate at the Optimum and Suddenlink segments were 20.4% and 17.8%, respectively, on a year-over-year basis.
Liquidity
At the end of 2017, Altice USA had $273 million of cash and $22,516 million of debt outstanding.
Subscriber Statistics
Total customer relationships in the fourth quarter were 4.9603 million, including 4.535 million connections for the Residential segment and 0.3713 million connections for the SMB segment. In the Residential segment, the subscriber count was 3.4055 million for Pay TV, 4.0462 million for Broadband and 2.5574 million for Telephony business. Average monthly revenue per user (ARPU) in the reported quarter was $140.2, up 1.5% year over year.
Guidance
Altice anticipates revenues to grow 2.5-3% year over year in 2018. Altice USA also reiterates its plan to expand its adjusted EBITDA and cash flow margins over the medium to long-term.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month. There have been two revisions lower for the current quarter.
VGM Scores
At this time, ATUS has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Based on our scores, the stock is equally suitable for value, growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions looks promising. Notably, ATUS has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Altice USA, Inc. (ATUS): Free Stock Analysis Report
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