Why Dish (DISH) Fell Today

NEW YORK (TheStreet) -- Dish Network  (DISH) has withdrawn its $2.2 billion bid to buy bankrupt wireless broadband company LightSquared.

Shares of Dish fell 2.6% to $56.48 Thursday on the news.

Dish dropped the bid shortly before the start of a trial that will determine if Dish chairman Charlie Ergen illegally purchased LightSquared debt on behalf of his company. According to The Wall Street Journal, the deal isn't technically dead until the deadline at 11:59 p.m. on Friday.

The LightSquared bid was seen as a way for Dish to expand into mobile video and other Internet services. The wireless broadband company owns many valuable spectrum licenses, which would help Dish enter the wireless market.

Dish was recently rumored to be looking into making a bid for T-Mobile (TMUS) as a way to enter the wireless market. Such a bid may rival a bid from Sprint (S) owner Softbank

TheStreet Ratings team rates Dish Network as a Hold with a ratings score of C+. The team has this to say about its recommendation:

"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 2.2%. 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 ($1.53 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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