Hot Stock to watch: Altice USA Inc (NYSE: ATUS)

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Altice USA Inc (NYSE: ATUS) stock rose over 2.3% on Feb 22nd, 2019 (As of 10:59 am GMT-5; Source: Google finance) after the company in the fourth quarter of FY 18 has reported the 4% rise in the revenue to $2.45 billion, driven by Residential revenue growth of 2.1%, Business Services revenue growth of 5.3% and advertising revenue growth of 33.2%. Adjusted EBITDA grew 7.8% YoY and Adjusted EBITDA margin of 45.5% in Q4 2018 excluding impact of consolidating i24 losses. ATUS has generated $417 million of free cash flow in the fourth quarter. ATUS has generated a total of $1.35 billion of free cash flow and that’s up 27% year-over-year. This is after $120 million of cash restructuring costs in the year. The company’s cash tax was less than $2 million in the fourth quarter and $14 million for the year.

Moreover, ATUS has recently completely $5 billion of refinancing activity. The weighted average life of debt has been extended from 5.9 to 6.6 years, our weighted average cost of debt has reduced from 6.5% to 6.1% and that represents over $80 million of annual cash savings that’s mostly from having taken out the $1.8 billion, 10/8% notes, which become callable in January as well as taking out the 8 5/8% notes, which matured in February. ATUS had refinanced that paper with the new $1.75 billion 6.5% 10-year guaranteed notes and a new $1 billion eight-year Term Loan B with the margin of LIBOR plus 300.

ATUS for FY 18 has achieved the revenue growth of 2.8% YoY (in line with guidance for ~2.5-3.0% YoY growth), Adjusted EBITDA margin expansion of 0.7 percentage points YoY (in line with guidance for Adjusted EBITDA margin expansion) and reported annual capex of $1.15bn (in line with guidance to be less than $1.3bn). Altice USA also reached its year-end leverage target of 4.5x to 5.0x net debt / Adjusted EBITDA, reporting 4.9x at the end of 2018 on a L2QA basis.

For FY 19, ATUS expects the revenue growth to be of 2.5-3.0% YoY, increased investment for the continued rollout of Altice One, fiber (FTTH) deployment, and new mobile network with annual capex within a range of $1.3bn to $1.4bn, Free Cash Flow growth (compared to $1.35bn in FY 2018) including mobile related costs, year-end leverage target unchanged at 4.5x to 5.0x net debt / Adjusted EBITDA (L2QA basis) and share repurchases of $1.5bn (ex-M&A)

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