Results: United States Cellular Corporation Beat Earnings Expectations And Analysts Now Have New Forecasts

Shareholders might have noticed that United States Cellular Corporation (NYSE:USM) filed its annual result this time last week. The early response was not positive, with shares down 3.7% to US$31.68 in the past week. Revenues were US$4.0b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$2.62 were also better than expected, beating analyst predictions by 14%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for United States Cellular

Following last week's earnings report, United States Cellular's three analysts are forecasting 2021 revenues to be US$4.08b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plunge 36% to US$1.71 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.12b and earnings per share (EPS) of US$1.70 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$40.25. 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 United States Cellular at US$50.50 per share, while the most bearish prices it at US$31.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that United States Cellular's rate of growth is expected to accelerate meaningfully, with the forecast 1.1% revenue growth noticeably faster than its historical growth of 0.2%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 4.2% next year. It seems obvious that, while the future growth outlook is brighter than the recent past, United States Cellular is expected to grow slower than the wider industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. The consensus price target held steady at US$40.25, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for United States Cellular going out to 2023, and you can see them free on our platform here.

It is also worth noting that we have found 2 warning signs for United States Cellular that you need to take into consideration.

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