Altice USA: Down 30% YTD, is Now a Good Time to Buy?

Altice USA Inc. (ATUS) in Bethpage, N.Y. is one of the leading broadband communications and video services providers in the United States, offering broadband, video, mobile, proprietary content, and advertising services to more than five million household and corporate users across 21 states through the Optimum and Suddenlink brands.

While the stock is up 9.4% in price over the past months, it has declined 68.2% over the past year and 33.8% year-to-date to close yesterday’s trading session at $10.71. In addition, the stock is currently trading 69.9% below its 52-week high of $35.55, which it hit on June 11, 2021.

Also, equity researchers at Morgan Stanley recently cut their price target for the stock to $13 from $15, making its near-term prospects look uncertain.

Here is what could shape ATUS' performance in the near term:

Declining Financials

ATUS' total revenue declined 2.3% year-over-year to $2.42 billion for the first quarter ended March 31, 2022. Its operating income declined 15.8% from its year-ago value to $512.47 million. The company's net income decreased 27.4% from its year-ago value to $202.14 million. And its loss per share amounted to $0.43. In addition, its net cash provided from operating activities declined 19.9% from the prior-year quarter to $600.22 million.

Discounted Valuation

In terms of forward Price/Book, the stock is currently trading at 6.98x, which is 61.2% lower than the 18x industry average. Also, its 1.86x forward Price/Cash Flow is 80.24% lower than the 9.41x industry average. Furthermore, ATUS' 0.50x forward Price/Sales is 64.9% lower than the 1.42x industry average.

POWR Ratings Reflect Uncertainty

ATUS has an overall C rating, which equates to a Neutral in our proprietary POWR Ratings system. The POWR ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. ATUS has a C grade for Stability and Quality. Its 1.21 stock beta is in sync with the Stability grade. In addition, the company's declining financials are consistent with the Quality grade.

Among the nine stocks in the D-rated Entertainment - TV & Internet Providers industry, ATUS is ranked #3.

Beyond what I have stated above, you can view ATUS ratings for Growth, Value, Momentum, and Sentiment here.

Bottom Line

ATUS is currently trading below its 50-day and 200-day moving averages of $11.06 and $15.84, respectively, indicating a downtrend. Furthermore, it could continue retreating in price in the near term based on its declining financials and rising competition among its peers. So, we think investors should wait before scooping up its shares.

How Does Altice USA Inc. (ATUS) Stack Up Against its Peers?

While ATUS has an overall C rating, one might want to consider its industry peer, Comcast Corporation (CMCSA), which has an overall A (Strong Buy) rating.

ATUS shares were unchanged in premarket trading Monday. Year-to-date, ATUS has declined -33.81%, versus a -12.35% rise in the benchmark S&P 500 index during the same period.

Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.

More...