Why Is ViaSat (VSAT) Down 0.5% Since Last Earnings Report?
A month has gone by since the last earnings report for ViaSat (VSAT). Shares have lost about 0.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ViaSat due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Viasat Reports Y/Y Wider Q3 Loss Despite Solid Revenues
Viasat reported higher revenues year over year, backed by healthy demand trends. Growth in commercial air IFC services, rising shipments and installments of mobility terminals, and growing demand for information assurance products supported the top line during the quarter. However, the decline in fixed broadband subscribers partially reversed this trend.
Net Income
The company incurred a net loss of $124.4 million or a loss of 99 cents per share compared with a net loss of $48.2 million or a loss of 64 cents per share in the prior-year quarter. High interest expenses owing to the debt incurred for the Inmarsat acquisition adversely impacted the bottom line during the quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 14 cents.
Excluding non-recurring items, Viasat recorded a non-GAAP net income of $29.7 million or 24 cents per share against a net loss of $10.9 million or a loss of 14 cents per share in the prior-year period.
Revenues
Revenues surged 58% to $1.1 billion, driven by solid growth in product and service revenues. The top line surpassed the consensus estimate by 9 million.
Product revenues were $303.1 million, up from $249.3 million in the year-ago quarter. Net sales from Service more than doubled to $825.5 million from $402.1 million in the year-ago quarter.
Revenues from Satellite Services improved to $581.4 million from $302.4 million in the year-ago quarter. The nearly two-fold rise was driven by healthy demand for commercial air IFC services and incremental contribution from the Inmarsat buyout. The segment’s adjusted EBITDA more than tripled to $288.5 million from $90.4 million, backed by higher commercial air IFC service activations and a full quarter contribution from Inmarsat.
Revenues from Commercial Networks remained relatively flat at $166.4 million as lower revenues from commercial air IFC terminal deliveries were offset by incremental contribution from Inmarsat. Adjusted EBITDA came in at a loss of $35.1 million compared with a loss of $19.2 million a year ago.
The Government Systems segment registered revenues of $380.8 million from continuing operations, up 109% year over year, driven by solid Inmarsat contribution. The segment’s adjusted EBITDA from continuing operations was $129.7 million, up from $50.9 million, backed by the contribution from Inmarsat and solid product revenues.
Other Details
In the December quarter, the company reported an operating loss of $156.5 million compared with an operating loss of $39.5 million in the prior-year quarter. Adjusted EBITDA was $383.1 million, up from $138.9 million in the year-ago quarter.
Cash Flow & Liquidity
During the third quarter of fiscal 2024, Viasat generated an operating cash flow of $134 million compared with $89 million in the prior-year period. As of Dec 31, 2023, the company has $1.6 billion in cash and cash equivalents, with a net debt of $5.9 billion.
Outlook
For fiscal 2024, management expects revenues to increase by high single-digit year over year in the range of $4.1-$4.25 billion. Adjusted EBITDA from continuing operations is predicted to increase by mid-single digit. Viasat anticipates strong growth in Government Systems and Commercial Network segments with a relatively modest year-over-year growth in Satellite Services.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -1695.2% due to these changes.
VGM Scores
Currently, ViaSat has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, ViaSat has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
ViaSat is part of the Zacks Wireless Equipment industry. Over the past month, Qualcomm (QCOM), a stock from the same industry, has gained 15.1%. The company reported its results for the quarter ended December 2023 more than a month ago.
Qualcomm reported revenues of $9.94 billion in the last reported quarter, representing a year-over-year change of +5.1%. EPS of $2.75 for the same period compares with $2.37 a year ago.
Qualcomm is expected to post earnings of $2.31 per share for the current quarter, representing a year-over-year change of +7.4%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Qualcomm. Also, the stock has a VGM Score of C.
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Viasat Inc. (VSAT) : Free Stock Analysis Report
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