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TheStreet Open House

Why DirecTV (DTV) Stock Is Up Today

NEW YORK (TheStreet) -- Shares of DirecTV (DTV) are higher by 1.04% to $85.43 on heavy volume in mid-afternoon trading on Monday.

The stock began to rise following a report by the New York Post suggesting AT&T (T) has come to terms with the federal government, and is now on its way to purchasing the satellite TV supplier.

So far, 4.58 million shares of DirecTV exchanged hands as compared to its average daily volume of 3.18 million shares.

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AT&T has reportedly worked out its plan for purchasing DirecTV with the Department of Justice, sources told the Post, but terms and conditions of the agreement have not been released.

Since AT&T and the DOJ were able to come to an agreement, the Post reports the merger will likely be cleared by the DOJ in October. 

Separately, TheStreet Ratings team rates DIRECTV as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate DIRECTV (DTV) 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 solid stock price performance, growth in earnings per share and increase in net income. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 34.74% and other important driving factors, this stock has surged by 47.41% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • DIRECTV has improved earnings per share by 34.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DIRECTV increased its bottom line by earning $5.19 versus $4.61 in the prior year. This year, the market expects an improvement in earnings ($5.92 versus $5.19).
  • 48.46% is the gross profit margin for DIRECTV which we consider to be strong. Regardless of DTV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.93% trails the industry average.
  • Net operating cash flow has remained constant at $1,474.00 million with no significant change when compared to the same quarter last year. Despite stable cash flow, DIRECTV's cash flow growth rate is still lower than the industry average growth rate of 13.29%.
  • You can view the full analysis from the report here: DTV Ratings Report

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