Altice USA Inc (ATUS, Financial) has recently experienced a significant surge in its stock price, capturing the attention of investors and market analysts alike. Over the past week, the company's stock price has seen a remarkable 47.26% gain, while the past three months have witnessed a 27.59% increase. Despite these impressive gains, the current GF Value of $8.65 suggests a cautious approach, as it is substantially higher than the current price of $2.96. This discrepancy indicates a possible value trap, urging investors to think twice before making a decision. The past GF Value was $12.4, which also pointed to a possible value trap at that time. With a market capitalization of $1.35 billion, Altice USA's recent performance has certainly made waves in the stock market.
Company Overview
Altice USA Inc operates within the telecommunication services industry, providing essential services such as television, internet access, and phone services. The company's history of acquisitions, including Suddenlink in 2015 and Cablevision in 2016, has expanded its reach to approximately 9 million homes and businesses across the United States. Operating under the Optimum brand name, Altice USA has a strong presence in both smaller markets and the densely populated New York City metro area. In addition to its core services, the company owns News 12 Networks and i24News, further diversifying its operations. Since its spinoff from Altice Europe in 2018, Altice USA has continued to evolve and adapt to the dynamic telecommunications landscape.
Profitability Insights
Altice USA's profitability is robust, with a Profitability Rank of 7/10, indicating a strong position within the industry. The company's operating margin stands at an impressive 20.75%, outperforming 79.63% of 383 companies in the same sector. However, the reported ROE of 10000.00% and ROA of 0.16% should be approached with caution, as these figures may not be fully representative due to data limitations. The ROIC of 3.91% suggests that Altice USA is generating reasonable cash flow relative to the capital invested. Over the past decade, the company has maintained profitability for 7 years, showcasing its resilience and operational efficiency.
Growth Trajectory
Altice USA's growth prospects are mixed, with a Growth Rank of 6/10. The company has experienced a 6.20% 3-year revenue growth rate per share and a 10.70% 5-year revenue growth rate per share, indicating steady progress. However, the estimated total revenue growth rate for the next 3 to 5 years is projected at -2.61%, which may raise concerns about future expansion. On the brighter side, the EPS without NRI growth rate is expected to soar by 63.76% in the same period, suggesting potential for significant earnings improvement. These growth indicators reflect a company with a solid foundation, yet facing challenges in a competitive and ever-changing industry.
Investor Confidence
Notable investors have taken positions in Altice USA, demonstrating confidence in the company's potential. PRIMECAP Management (Trades, Portfolio) holds 5,285,000 shares, representing a 1.16% share percentage. Seth Klarman (Trades, Portfolio) follows closely with 4,774,615 shares, accounting for 1.05% of the company's shares. Jim Simons (Trades, Portfolio), another prominent investor, owns 2,878,800 shares, which translates to a 0.63% stake. These holdings by experienced investors may signal a belief in the company's value proposition and strategic direction.
Competitive Landscape
When compared to its peers, Altice USA stands among the top in terms of market capitalization. Shenandoah Telecommunications Co (SHEN, Financial) has a market cap of $935.061 million, Gogo Inc (GOGO, Financial) is valued at $1.07 billion, and Liberty Latin America Ltd (LILA, Financial) holds a market cap of $1.27 billion. Altice USA's market cap of $1.35 billion positions it as a significant player within the telecommunication services industry, suggesting that it has the scale and resources to compete effectively.
Concluding Analysis
In conclusion, Altice USA Inc's stock performance has been impressive in recent months, with substantial gains that have outpaced many expectations. The company's strong profitability metrics and historical growth rates provide a solid foundation for its valuation. However, the current GF Valuation advises caution, as the market price is significantly below the GF Value, indicating a potential value trap. Investors should also consider the mixed growth projections and the positions of major holders when evaluating the stock. Compared to its competitors, Altice USA holds a competitive market cap, which may offer some reassurance about its ability to maintain its market position. Ultimately, while the recent stock rally is noteworthy, a thorough analysis of all factors is essential for informed investment decisions.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
