Dish (DISH) Up 53.4% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Dish Network (DISH). Shares have added about 53.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Dish 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.

DISH Network Q1 Earnings Lag, User Base Declines Y/Y

DISH Network’s first-quarter 2020 earnings of 13 cents per share missed the Zacks Consensus Estimate by 77.2% and also plunged 80% year over year.

Revenues inched up 0.9% year over year to $3.22 billion and also surpassed the consensus mark by 2.9%.

The United States revenues climbed 0.8% year over year to $3.20 billion. Canada and Mexico revenues surged 46.4% from the year-ago quarter to $15.9 million.

DISH exited the reported quarter with 9.012 million DISH TV subscribers, down 6.1%, and 2.311 million Sling TV subscribers, down 4.7%. Total Pay-TV subscribers were 11.323 million, down 6.1% year over year.

It goes without saying that the coronavirus adversely impacted DISH’s first-quarter results. The pandemic caused severe disruption in certain commercial segments served by the company including the hospitality and airline industries.

Moreover, in a bid to avoid charging commercial customers for services that were no longer viewed by them, DISH pulled the plug on services or provided a temporary rate relief.

Those commercial accounts including the ones that DISH expects to disconnect represent roughly 250,000 subscribers, which DISH removed from its ending Pay-TV subscriber count as of Mar 31, 2020.

Top-Line Details

Subscriber-related revenues (98.4% of revenues) increased 0.6% from the year-ago quarter to $3.17 billion. Equipment sales and other revenues surged 30.4% to $51.3 million.

Pay-TV video and related revenues climbed 1.1% to $3.13 billion. Equipment sales and other revenues jumped 30.4% year over year to $51.3 million. However, broadband revenues dropped 29.5% year over year to $35.1 million.

The company lost 413K net Pay-TV subscribers in the reported quarter compared with 259K lost a year ago. Moreover, DISH lost nearly 281K net Sling TV subscribers and 132K DISH TV subscribers.

However, Pay-TV ARPU increased 4.4% year over year to $88.76. Additionally, the churn-out rate was 1.54% compared with the year-ago quarter’s 1.74%.

Operating Details

In the first quarter, subscriber-related expenses dipped 2.2% year over year to $1.96 billion. As a percentage of revenues, subscriber-related expenses declined 200 basis points (bps) on a year-over-year basis to 60.9%.

Subscriber acquisition costs (SACs) flared up 30.9% from the year-ago quarter to $253.9 million. As a percentage of revenues, SACs expanded 180 bps to 7.9%.

DISH TV SAC was $861, up 4% year over year.

EBITDA dropped 52% year over year to $286.3 million. Operating income also plunged 68.4% year over year to $144.1 million.

Balance Sheet

As of Mar 31, 2020, cash, cash equivalents and current marketable investment securities were $2.83 billion compared with $2.44 billion as of Dec 31, 2019.

Total debt as of Mar 31, 2020 was $14.15 billion compared with $14.14 billion as of Dec 31, 2019.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Dish has an average Growth Score of C, a grade with the same score on the momentum front. 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 B. 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 this revision indicates a downward shift. Notably, Dish has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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