Telecommunications and cable services provider Altice USA (NYSE:ATUS) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 1.9% year on year to $2.25 billion. It made a GAAP loss of $0.05 per share, down from its profit of $0.06 per share in the same quarter last year.

Is now the time to buy Altice? Find out by accessing our full research report, it's free.

Based in Long Island City, Altice USA (NYSE:ATUS) is a telecommunications company offering cable, internet, telephone, and television services across the United States.

Cable and Satellite

The massive physical footprints of fiber in the ground or satellites in space make it challenging for companies in this industry to adjust to shifting consumer habits. Over the last decade-plus, consumers have ‘cut the cord’ to their traditional cable subscriptions in favor of streaming options. While that is a headwind, this affinity to streaming means more households need high-speed internet, and companies that successfully serve customers can enjoy high retention rates and pricing power since the options for internet connectivity in any geography is usually limited.

Sales Growth

A company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. Altice's revenue was flat over the last five years. Within consumer discretionary, a long-term historical view may miss a company riding a successful new product or emerging trend. That's why we also follow short-term performance. Altice's recent history shows a reversal from its five-year trend as its revenue has shown annualized declines of 4.3% over the last two years.

We can dig even further into the company's revenue dynamics by analyzing its number of broadband subscribers and pay tv subscribers, which clocked in at 4.14 million and 2.09 million in the latest quarter. Over the last two years, Altice's broadband subscribers averaged 2.4% year-on-year declines while its pay tv subscribers averaged 10.8% year-on-year declines.

This quarter, Altice reported a rather uninspiring 1.9% year-on-year revenue decline to $2.25 billion of revenue, in line with Wall Street's estimates. Looking ahead, Wall Street expects revenue to decline 2.6% over the next 12 months, a deceleration from this quarter.

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Cash Is King

If you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.

Over the last two years, Altice has shown mediocre cash profitability, putting it in a pinch as it gives the company limited opportunities to reinvest, pay down debt, or return capital to shareholders. Its free cash flow margin has averaged 2.3%, subpar for a consumer discretionary business.

Altice's free cash flow came in at $63.57 million in Q1, equivalent to a 2.8% margin. This result was great for the business as it flipped from cash flow negative in the same quarter last year to cash flow positive this quarter.

Key Takeaways from Altice's Q1 Results

Revenue outperformed slightly as volumes (subscribers in this case) were in line with expectations. However, the company's adjusted EBITDA and EPS both missed. Overall, the results were mixed. The stock is up 2% after reporting and currently trades at $2.08 per share.

So should you invest in Altice right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.