The firm believes that U.S. Cellular's turnaround has begun, it will monetize its non-core towers in the second half, and potentially others in its core markets, and views weakness as a buying opportunity.
Shares of U.S. Cellular closed yesterday at $33.61
TheStreet Ratings team rates US CELLULAR CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
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"We rate US CELLULAR CORP (USM) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 296.4% when compared to the same quarter one year prior, rising from $4.91 million to $19.48 million.
- USM's debt-to-equity ratio is very low at 0.26 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.06, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for US CELLULAR CORP is rather high; currently it is at 51.28%. Regardless of USM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, USM's net profit margin of 2.10% is significantly lower than the industry average.
- Net operating cash flow has significantly decreased to $63.54 million or 71.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- In its most recent trading session, USM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: USM Ratings Report