Altice USA, Inc. (NYSE:ATUS) came out with its full-year results last week, and we wanted to see how the business is performing and what top analysts think of the company following this report. It looks like a pretty bad result, all things considered. Although revenues of US$9.8b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 47% to hit US$0.21 per share. Earnings are an important time for investors, as they can track a company’s performance, look at what top analysts are forecasting for next year, and see if there’s been a change in sentiment towards the company. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
After the latest results, the 24 analysts covering Altice USA are now predicting revenues of US$10.1b in 2020. If met, this would reflect an okay 4.0% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to soar 266% to US$0.77. Yet prior to the latest earnings, analysts had been forecasting revenues of US$10.2b and earnings per share (EPS) of US$0.88 in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.
The consensus price target held steady at US$33.47, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Altice USA at US$42.00 per share, while the most bearish prices it at US$22.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Altice USA’s performance in recent years. We would highlight that Altice USA’s revenue growth is expected to slow, with forecast 4.0% increase next year well below the historical 12%p.a. growth over the last five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 3.7% per year. Factoring in the forecast slowdown in growth, it looks like analysts are expecting Altice USA to grow at about the same rate as the wider market.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn’t be too quick to come to a conclusion on Altice USA. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Altice USA going out to 2024, and you can see them free on our platform here..
You can also see whether Altice USA is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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