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Altice (ATUS) Q2 Loss Wider Than Estimated, Revenues Miss

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Altice USA, Inc. (ATUS - Free Report) reported dismal results with wider-than-expected loss in second-quarter 2018.

Net Loss

Quarterly net loss came in at $97.9 million or loss of 13 cents per share compared with a net loss of $480.3 million or loss of 73 cents per share in the year-ago quarter. The improvement was mostly driven by higher debt extinguishment charges in the year-ago quarter.

Adjusted loss per share was 8 cents compared with loss of 17 cents in the year-ago quarter. The figure was wider than the Zacks Consensus Estimate of loss of 5 cents.


Altice USA, Inc. Price, Consensus and EPS Surprise

Quarter Details

Total revenues increased 1.8% year over year to $2,364.2 million driven by growth in Residential, Business Services and Advertising businesses. The figure, however, missed the Zacks Consensus Estimate of $2,372 million.

Broadband revenues were $712.2 million, up 10.8% year over year. Business services and wholesale revenues came in at $337.4 million, up 4.2%. Advertising revenues totaled $109.9 million, up 12.7% and Pay TV revenues were $1,034.4 million, down 3.4%. Telephony revenues were $163.5 million, down 8.3% and Other revenues came in at $6.8 million, down 26.3%.

Quarterly operating income was $335.1 million compared with $253.3 million in the year-ago quarter mainly due to decline in depreciation and amortization. Adjusted EBITDA grew 1.5% in the second quarter to $1,005.5 million. Quarterly adjusted EBITDA margin remained flat year over year at 42.5%.

Cash Flow & Balance Sheet

Operating free cash flow for the quarter was down 2.5% to $765 million, reflecting increased investment in new fiber-to-the-home and the launch of Altice One. Cash capital expenditure was $241 million, representing 10.2% of revenues.

At the end of second-quarter 2018, the company’s net debt was $21,655 million, reflecting the $1.5 billion cash dividend paid prior to completion of the spin-off of the company from Altice N.V.

Guidance

For full-year 2018, Altice anticipates revenues to be up 2.5-3% year over year. The company also reiterated the plan to expand its adjusted EBITDA and cash flow margins, over the medium to long term.

Zacks Rank & Stocks to Consider

Altice currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the broader industry include Arista Networks, Inc. (ANET - Free Report) , Corning Incorporated (GLW - Free Report) and SeaChange International, Inc. (SEAC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Arista has a long-term earnings growth expectation of 21.2%. It beat earnings estimates in each the trailing four quarters, the average being 25.5%.         

Corning has a long-term earnings growth expectation of 8.2%. It beat earnings estimates in each the trailing four quarters, the average being 3.8%.         

SeaChange has a long-term earnings growth expectation of 10%. It surpassed earnings estimates thrice in the trailing four quarters with an average positive surprise of 282.8%.     

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