Altice USA (NYSE:ATUS) Has Gifted Shareholders With A Fantastic 111% Total Return On Their Investment

By
Simply Wall St
Published
February 11, 2021
NYSE:ATUS

One simple way to benefit from the stock market is to buy an index fund. But if you choose individual stocks with prowess, you can make superior returns. Just take a look at Altice USA, Inc. (NYSE:ATUS), which is up 89%, over three years, soundly beating the market return of 48% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 28% in the last year.

Check out our latest analysis for Altice USA

We don't think that Altice USA's modest trailing twelve month profit has the market's full attention at the moment. We think revenue is probably a better guide. As a general rule, we think this kind of company is more comparable to loss-making stocks, since the actual profit is so low. For shareholders to have confidence a company will grow profits significantly, it must grow revenue.

Over the last three years Altice USA has grown its revenue at 2.3% annually. Considering the company is losing money, we think that rate of revenue growth is uninspiring. The modest growth is probably broadly reflected in the share price, which is up 24%, per year over 3 years. Ultimately, the important thing is whether the company is trending to profitability. Given the market doesn't seem too excited about the stock, a closer look at the financial data could pay off, if you can find indications of a stronger growth trend in the future.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

earnings-and-revenue-growth
NYSE:ATUS Earnings and Revenue Growth February 11th 2021

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. If you are thinking of buying or selling Altice USA stock, you should check out this free report showing analyst profit forecasts.

What about the Total Shareholder Return (TSR)?

Investors should note that there's a difference between Altice USA's total shareholder return (TSR) and its share price change, which we've covered above. The TSR attempts to capture the value of dividends (as if they were reinvested) as well as any spin-offs or discounted capital raisings offered to shareholders. Altice USA hasn't been paying dividends, but its TSR of 111% exceeds its share price return of 89%, implying it has either spun-off a business, or raised capital at a discount; thereby providing additional value to shareholders.

A Different Perspective

While the market return was 27% in the last year, Altice USA returned 28% to shareholders. It has to be noted that the recent return falls short of the 28% shareholders have gained each year, over the last three years. In the best case scenario the share price is simply plateauing while the business itself continues to execute. It's always interesting to track share price performance over the longer term. But to understand Altice USA better, we need to consider many other factors. To that end, you should learn about the 5 warning signs we've spotted with Altice USA (including 1 which is a bit concerning) .

We will like Altice USA better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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