A month has gone by since the last earnings report for United States Cellular CorporationUSM . Shares have added about 6.1% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is USM 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.
United States Cellular Comfortably Beats on Q1 Earnings
United States Cellular recorded impressive results for the first quarter of 2018 with a diligent execution of operational plans and stringent cost-management activities. GAAP net income came in at $45 million or 52 cents per share compared with $26 million or 31 cents per share in the year-ago quarter. Excluding non-recurring items, adjusted earnings were 44 cents per share, which exceeded the Zacks Consensus Estimate of 29 cents.
Quarterly total revenues of $942 million increased 1% year over year and missed the Zacks Consensus Estimate of $949 million. While Service revenues of $724 million decreased 3%, revenues from Equipment sales were up 14% to $218 million due to better sales of both higher-priced devices and accessories.
Operating income improved to $65 million from $54 million in the year-ago quarter owing to diligent focus on cost management. Total cell sites in service were 6,473 at quarter end compared with 6,417 in the prior-year period. Total company-owned towers were 4,099 compared with 4,041 in the year-earlier quarter.
ARPU & Churn
Quarterly postpaid ARPU (average revenue per user) decreased to $44.34 from $45.42, while postpaid ARPA (average revenue per account) was $152.26 compared with $149.78. Postpaid churn improved to 1.23% from 1.29% in the year-ago period. Prepaid ARPU decreased to $31.78 from $33.66, while prepaid churn decreased to 5.27% in the reported quarter from 5.69%.
Cash Flow & Liquidity
For the first quarter of 2018, cash from operations aggregated $188 million compared with $61 million in the prior year quarter. Free cash flow for the reported quarter was $112 million.
United States Cellular exited the quarter with cash and cash equivalents of $509 million and long-term debt of $1,618 million.
United States Cellular reiterated its earlier guidance for 2018 and continues to expect total operating revenues in the band of $3,850-$4,050 million. Adjusted EBITDA is projected in the range of $765-$915 million while capital expenditure is estimated between $500 and $550 million. The company projects adjusted OIBDA in the range of $625-$775 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower. Last month, the consensus estimate has shifted downward by 6.8% due to these changes.
United States Cellular Corporation Price and Consensus
At this time, USM has a great Growth Score of A, though it is lagging a lot on the momentum front with a D. However, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
USM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.