Why T-Mobile (TMUS) and Dish (DISH) Are Up Today

NEW YORK (TheStreet) -- Dish Network (DISH) is reportedly considering a bid for T-Mobile (TMUS) after failing to acquire Sprint (S) earlier in 2013.

According to a Reuters report, Dish has spoken to Deutsche Telekom (DTE.DE), the majority owner of T-Mobile, about a possible deal. The satellite TV company hasn't made any official bids yet, but it could do so next year.

A bid for T-Mobile would be the second time Dish bid to acquire a U.S. wireless carrier. Earlier in 2013 the company bid to acquire Sprint, but was outbid by Japanese carrier Softbank (TYO:9984).

The Softbank-owned Sprint is reportedly preparing its own bid for T-Mobile in the first half of 2014. If both Sprint and Dish go through with the plans, it could result in a bidding war between the two for the fourth-place U.S. carrier.

Shares of T-Mobile are up 5.6% to $28.78, and shares of Dish are up 1.3% to $55.99 during Thursday trading.

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

"We rate DISH NETWORK CORP (DISH) 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 revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and generally higher debt management risk."

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

  • DISH's revenue growth has slightly outpaced the industry average of 3.1%. Since the same quarter one year prior, revenues slightly increased by 2.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Media industry. The net income increased by 298.7% when compared to the same quarter one year prior, rising from -$158.46 million to $314.91 million.
  • DISH NETWORK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, DISH NETWORK CORP reported lower earnings of $1.41 versus $3.38 in the prior year. This year, the market expects an improvement in earnings ($1.51 versus $1.41).
  • The debt-to-equity ratio is very high at 20.13 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 2.86, which shows the ability to cover short-term cash needs.
  • Net operating cash flow has decreased to $401.05 million or 41.53% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

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