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Why Is ViaSat (VSAT) Up 5% Since Last Earnings Report?
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It has been about a month since the last earnings report for ViaSat (VSAT - Free Report) . Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ViaSat due for a pullback? 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.
Viasat’s Q2 Earnings Beat Estimates, Revenues Miss
Viasat reported mixed second-quarter fiscal 2021 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.
Net Income
On a GAAP basis, net income in the September quarter was $2 million or 3 cents per share compared with $3.2 million or 5 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 8 cents, delivering a positive surprise of 160%.
Non-GAAP net income came in at $20.5 million or 31 cents per share compared with $21 million or 33 cents per share in the prior-year quarter.
Revenues
Quarterly total revenues declined 6.4% year over year to $554.3 million. This was largely due to a decrease in U.S. commercial airline traffic. While product revenues totaled $255.9 million, down 16.6% year over year, service revenues grew 4.5% to $298.3 million. Also, the top line lagged the consensus estimate of $565 million.
Segment Results
Satellite Services revenues grew 5% year over year to $215.9 million. This was driven by subscriber demand for broadband, reflecting the work-from-home and school-from-home environment with substantial growth in video streaming. Average revenue per user was just above $100, as subscribers chose higher bandwidth and value data plans.
In-flight connectivity (IFC) services improved modestly during the quarter as airline customers began seeing more passengers. The company added about 5,000 subscribers in the quarter, ending it with 603,000 U.S. subscribers. The segment’s operating profit was $11.5 million compared with $5.1 million in the year-ago quarter. Adjusted EBITDA was $84.6 million, up 19.7%.
Commercial Networks revenues were down 10.3% to $78.9 million, primarily due to lower IFC terminal product shipments. This was, however, partly offset by higher sales of fixed broadband terminal products. The company is focused on strategic investments in higher throughput/lower cost per bit satellite payload, ground network and terminal development. The segment’s operating loss was $45.4 million compared with operating loss of $46.8 million in the year-ago quarter. Adjusted EBITDA was a negative $26.6 million compared with negative $31.8 million in the year-ago quarter.
Government Systems revenues fell 13.1% to $259.5 million. This compares to a very strong period last year. The segment benefited from demand across a broad portfolio of products and services. The company secured orders worth more than $450 million in the quarter. The segment’s operating profit was $47.9 million, down 22.9% year over year. Adjusted EBITDA was $72.3 million, down 8.8% on lower revenues.
Other Details
Overall, operating income was $12.7 million compared with $18.4 million in the prior-year quarter. Adjusted EBITDA came in at $130.3 million compared with $118.2 million a year ago. New contract awards during the quarter aggregated $730.6 million, up from $692.3 million. Sales backlog was record high at $2,304.7 million, up from $1,944.9 million a year ago.
Cash Flow & Liquidity
During the second quarter of fiscal 2021, Viasat’s cash from operating activities was record high of $177 million, driven by earnings and optimization of working capital. This compares to $137 million in the prior-year period.
As of Sep 30, 2020, the company had $350.4 million in cash and cash equivalents with $1,681.8 million of senior notes.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -63.64% due to these changes.
VGM Scores
Currently, ViaSat has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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, ViaSat has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is ViaSat (VSAT) Up 5% Since Last Earnings Report?
It has been about a month since the last earnings report for ViaSat (VSAT - Free Report) . Shares have added about 5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ViaSat due for a pullback? 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.
Viasat’s Q2 Earnings Beat Estimates, Revenues Miss
Viasat reported mixed second-quarter fiscal 2021 results, wherein the bottom line beat the Zacks Consensus Estimate but the top line missed the same.
Net Income
On a GAAP basis, net income in the September quarter was $2 million or 3 cents per share compared with $3.2 million or 5 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 8 cents, delivering a positive surprise of 160%.
Non-GAAP net income came in at $20.5 million or 31 cents per share compared with $21 million or 33 cents per share in the prior-year quarter.
Revenues
Quarterly total revenues declined 6.4% year over year to $554.3 million. This was largely due to a decrease in U.S. commercial airline traffic. While product revenues totaled $255.9 million, down 16.6% year over year, service revenues grew 4.5% to $298.3 million. Also, the top line lagged the consensus estimate of $565 million.
Segment Results
Satellite Services revenues grew 5% year over year to $215.9 million. This was driven by subscriber demand for broadband, reflecting the work-from-home and school-from-home environment with substantial growth in video streaming. Average revenue per user was just above $100, as subscribers chose higher bandwidth and value data plans.
In-flight connectivity (IFC) services improved modestly during the quarter as airline customers began seeing more passengers. The company added about 5,000 subscribers in the quarter, ending it with 603,000 U.S. subscribers. The segment’s operating profit was $11.5 million compared with $5.1 million in the year-ago quarter. Adjusted EBITDA was $84.6 million, up 19.7%.
Commercial Networks revenues were down 10.3% to $78.9 million, primarily due to lower IFC terminal product shipments. This was, however, partly offset by higher sales of fixed broadband terminal products. The company is focused on strategic investments in higher throughput/lower cost per bit satellite payload, ground network and terminal development. The segment’s operating loss was $45.4 million compared with operating loss of $46.8 million in the year-ago quarter. Adjusted EBITDA was a negative $26.6 million compared with negative $31.8 million in the year-ago quarter.
Government Systems revenues fell 13.1% to $259.5 million. This compares to a very strong period last year. The segment benefited from demand across a broad portfolio of products and services. The company secured orders worth more than $450 million in the quarter. The segment’s operating profit was $47.9 million, down 22.9% year over year. Adjusted EBITDA was $72.3 million, down 8.8% on lower revenues.
Other Details
Overall, operating income was $12.7 million compared with $18.4 million in the prior-year quarter. Adjusted EBITDA came in at $130.3 million compared with $118.2 million a year ago. New contract awards during the quarter aggregated $730.6 million, up from $692.3 million. Sales backlog was record high at $2,304.7 million, up from $1,944.9 million a year ago.
Cash Flow & Liquidity
During the second quarter of fiscal 2021, Viasat’s cash from operating activities was record high of $177 million, driven by earnings and optimization of working capital. This compares to $137 million in the prior-year period.
As of Sep 30, 2020, the company had $350.4 million in cash and cash equivalents with $1,681.8 million of senior notes.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -63.64% due to these changes.
VGM Scores
Currently, ViaSat has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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, ViaSat has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.