Why Is ViaSat (VSAT) Down 4.9% Since Last Earnings Report?
A month has gone by since the last earnings report for ViaSat (VSAT). Shares have lost about 4.9% 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 its most recent earnings report in order to get a better handle on the important drivers.
Viasat Q4 Earnings & Revenues Top Estimates, Up Y/Y
Viasat delivered solid fourth-quarter fiscal 2019 results, wherein both revenues and adjusted earnings surpassed the respective Zacks Consensus Estimate, and increased year over year.
Net Income
On a GAAP basis, net income for the quarter was $2.5 million or 4 cents per share against net loss of $19.9 million or loss of 34 cents per share in the year-ago quarter. The year-over-year improvement was primarily driven by higher product and service revenues. For fiscal 2019, net loss was $67.6 million or loss of $1.13 per share compared with net loss of $67.3 million or loss of $1.15 per share in fiscal 2018.
Non-GAAP net income was $20.4 million or 33 cents per share against net loss of $3.1 million or loss of 5 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of loss of 25 cents.
Revenues
Quarterly total revenues increased 26.7% year over year to $557.2 million, primarily driven by double-digit top-line growth in all three operating segments. The top line surpassed the consensus estimate of $549 million. For fiscal 2019, revenues increased 29.7% year over year to $2,068.3 million on the back of solid execution across the company’s diversified business lines.
Quarterly Segmental Performance
Revenues from Satellite Services increased 31% year over year to $190 million on the back of higher ARPUs, up 15% year over year. The company continues to execute on its premium service strategy across its residential and enterprise markets. It witnessed higher customer satisfaction, lower churn rate and improved operating efficiencies, which contributed to adjusted EBITDA improvement. The segment’s operating profit was $0.7 million against loss of $21.1 million in the year-ago quarter. Adjusted EBITDA was $65.2 million, up 116.6% year over year, reflecting operating leverage inherit in Viasat’s fixed and mobile broadband service businesses.
Commercial Networks revenues were up 20.5% year over year to $91.8 million, as the company continued its in-flight connectivity (IFC) terminal delivery activities based on strong customer demand. The performance also reflected revenue growth across Viasat’s antenna systems infrastructure businesses and other satellite networking areas. The segment’s operating loss was $49.2 million compared with loss of $50.1 million in the year-ago quarter. Adjusted EBITDA was negative $34.3 million compared with negative $32.9 million a year ago. R&D expenses were down $7 million year over year, as Viasat progressed through final module test and validation for its first two ViaSat-3 class satellite payloads.
Revenues from Government Systems increased 25.9% year over year to $275.3 million, with most of this growth spread across the segment’s product lines. In services, strong gains were also witnessed as Viasat’s high capacity secure mobile broadband expanded operational capabilities across geographies and platforms. The segment’s operating profit was $60.2 million, up 48.3% year over year. Adjusted EBITDA was $77.3 million, up 32.4% year over year, reflecting the flow through top-line performance along with lower G&A and R&D as a percentage of revenues.
Cash Flow & Liquidity
During fiscal 2019, Viasat generated $327.6 million of cash from operations compared with $358.6 million in fiscal 2018.
As of Mar 31, 2019, the satellite and wireless networking technology provider had $261.7 million in cash and equivalents with $110 million of long-term debt compared with the respective tallies of $71.4 million and $287.5 million a year ago.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted 21.57% due to these changes.
VGM Scores
Currently, ViaSat has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
ViaSat has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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