DISH Network (DISH) Stock Gaining on T-Mobile Merger Speculation

NEW YORK (TheStreet) -- Shares of DISH Network (DISH) are higher by 5.63% to $74.80 in pre-market trading on Thursday morning, following reports the TV provider is in merger talks with wireless carrier T-Mobile (TMUS).

Both companies are in close agreement regarding what the combination would look like, sources told The Wall Street Journal.

DISH CEO Charlie Ergen will become the chairman and T-Mobile CEO John Legere would serve as CEO of the new company.

A total purchase price and the mix of cash and stock that would be used to pay for the deal are yet to be known, The Journal sources said. Adding that the talks are at "the formative stage" and cautioned that the discussions could result in no deal.

Deutsche Telekom (DTEGY) owns 66% of T-Mobile and has for some time been looking to sell or merge the company, The Journal noted.

If a deal were to be reached it would be the latest in a string of mergers between TV providers and wireless carriers. AT&T (T) is close to finishing up a $49 billion deal for DirecTV (DTV), and Charter Communications (CHTR) recently announced its intent to acquire Time Warner Cable (TWC) and Bright House Networks.

Separately, TheStreet Ratings team rates DISH NETWORK CORP as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate DISH NETWORK CORP (DISH) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, good cash flow from operations, solid stock price performance and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows low profit margins."

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 Media industry. The net income increased by 99.8% when compared to the same quarter one year prior, rising from $175.93 million to $351.49 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 3.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has increased to $891.60 million or 39.16% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 15.23%.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • DISH NETWORK CORP reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DISH NETWORK CORP increased its bottom line by earning $2.03 versus $1.86 in the prior year. For the next year, the market is expecting a contraction of 3.9% in earnings ($1.95 versus $2.03).
  • You can view the full analysis from the report here: DISH Ratings Report

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