Altice USA Inc (ATUS, Financial) has experienced a significant fluctuation in its stock price over recent months. The company's market capitalization currently stands at $1.28 billion, with a current price of $2.81 per share. Over the past week, Altice USA has seen a 5.98% gain in its stock price. However, looking at a broader time frame, the stock has suffered a 41.49% loss over the past three months. This volatility is reflected in the company's GF Value, which is currently $8.64, down from a past GF Value of $10.36. The current and past GF Valuations both suggest that Altice USA may be a Possible Value Trap, advising investors to Think Twice before making an investment decision.
Company Overview
Altice USA Inc, operating in the Telecommunication Services industry, is known for providing television, internet access, and phone services under the Optimum brand name. The company's reach extends to approximately 3.5 million U.S. homes and businesses, primarily in smaller markets, as well as the New York City metro area. Altice USA, which was spun off from Altice Europe in 2018, also owns News 12 Networks and i24News. Despite its significant presence in the telecommunications sector, the company's recent stock performance has raised questions about its valuation and future prospects.
Profitability Insights
Altice USA's Profitability Rank is a robust 7 out of 10, indicating a strong likelihood of continued profitability. The company's Operating Margin is an impressive 20.75%, which is higher than 79.43% of its peers in the industry. However, the Return on Equity (ROE) is not applicable, and the Return on Assets (ROA) stands at a modest 0.16%. The Return on Invested Capital (ROIC) is 3.91%, which is better than nearly half of the companies in the sector. Altice USA has maintained profitability for 7 out of the past 10 years, a testament to its solid financial foundation.
Growth Trajectory
The company's Growth Rank stands at 6 out of 10, reflecting a balance between past performance and future potential. Altice USA has a 3-Year Revenue Growth Rate per Share of 6.20% and a 5-Year Revenue Growth Rate per Share of 10.70%, both of which are commendable compared to industry counterparts. However, the Total Revenue Growth Rate for the next 3 to 5 years is estimated at -2.61%. The 3-Year EPS without NRI Growth Rate has declined by 31.30%, but the 5-Year EPS without NRI Growth Rate shows an increase of 13.40%. Looking ahead, the EPS Growth Rate for the next 3 to 5 years is projected at an optimistic 63.76%.
Investor Confidence
Notable investors have taken significant positions in Altice USA, demonstrating confidence in the company's potential. PRIMECAP Management (Trades, Portfolio) holds 5,285,000 shares, representing a 1.16% stake in the company. Seth Klarman (Trades, Portfolio) owns 4,774,615 shares, accounting for 1.05% of the company, and Jim Simons (Trades, Portfolio) has invested in 2,878,800 shares, making up 0.63% of Altice USA's shares. These investments by prominent investors may signal a belief in the company's value proposition and long-term growth prospects.
Competitive Landscape
When compared to its competitors, Altice USA holds its ground with a market cap of $1.28 billion. Shenandoah Telecommunications Co (SHEN, Financial) has a market cap of $904.899 million, Gogo Inc (GOGO, Financial) is valued at $1.15 billion, and Liberty Latin America Ltd (LILA, Financial) closely follows with a market cap of $1.29 billion. These companies represent the competitive environment within the Telecommunication Services industry, where Altice USA must innovate and execute effectively to maintain and grow its market share.
Conclusion
Altice USA Inc's recent stock performance, when analyzed in the context of its valuation metrics and industry performance, presents a mixed picture. The company's strong profitability and growth in revenue per share are offset by concerns over its future revenue growth and the recent significant drop in stock price. The investments by major holders suggest some level of confidence in the company's future, yet the GF Valuation warns of potential risks. In comparison to its competitors, Altice USA maintains a competitive position, but it must navigate industry challenges and investor skepticism to realize its growth potential and improve its market valuation.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
