DirecTV 4Q Beats Street Expectations, But Customer Growth Is Muted

DirecTV (NASDAQ:DTV) posted fourth-quarter results that beat Wall Street’s expectations and were boosted by rapid customer growth in Latin America, even though customer capture in the U.S. fell short of analysts’ forecasts.

Earnings were $718 million ($1.02 a share), up 16 percent from $618 million (74 cents) a year earlier. Analysts had expected the company to post earnings per share of 92 cents for the quarter. Sales grew 13 percent to $7.46 billion, beating expectations.

DirecTV did well in Latin America, adding 590,000 subscribers, a new record, and better than the previous quarter’s 574,000.

“Everyone knows Latin America is DirecTV’s best business,” Craig Moffett, an analyst at Sanford C. Bernstein & Co., said before the results were released. “The real issue for them is, how bad does it get in North America?”

In the U.S., customer growth was muted – at 125,000 customers, it missed the analysts’ forecast of 162,000 additions, and was far lower than the addition of 327,000 subscribers in the previous quarter.

However, James Ratcliffe, an analyst at Barclays Capital Inc., said in a note to clients that this may be considered creditable given the zero-growth scenario in the overall pay-TV market. DirecTV also announced plans to start a fresh buyback of its shares amounting to $6 billion.

Here’s how shares reacted to earnings:

DIRECTV (NASDAQ:DTV): DTV shares recently traded at $45.64, down $0.66, or 1.43%. They have traded in a 52-week range of $39.82 to $53.40. Volume today was 3,108,150 shares versus a 3-month average volume of 6,005,180 shares. The company’s trailing P/E is 14.34, while trailing earnings are $3.21 per share.

To contact the reporter on this story: Alex Capel at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com