DirecTV Beats Earnings Expectations and Shares the Love With Investors
It was a good fourth-quarter for satellite-television provider DirecTV (NASDAQ:DTV). Hell, it was a good year for the company. Shares are up more than 51 percent over the past 52 weeks as the television provider adds more and more customers each quarter, and extracts more and more money from those customers each quarter. Case in point: the fourth-quarter and full-year results released on Thursday morning.
DirecTV reported full-year U.S. revenue growth of 6 percent to $24.68 billion, an increase primarily driven by average revenue per user (ARPU) growth of 5.4 percent. Latin America revenues increased 10 percent for the year to $6.84 billion, “principally related to the addition of 1.2 million net new subscribers during the year.” Combined full-year revenues increased 6.7 percent to $31.75 billion, beating the mean analyst estimate of $31.64 billion. Full-year earnings increased 18 percent to $5.42 per share, beating the mean analyst estimate of $4.96 per share.
For the fourth-quarter, revenues increased 7 percent to $8.59 billion, beating the mean analyst estimate of $8.47 billion. Reported earnings fell by 2 cents on the year to $1.53 per share, beating the mean analyst estimate of $1.28 per share. Net subscriber additions for the quarter did decelerate to a gain of 93,000 from a gain of 103,000 in the year-ago period, but investors don’t seem too hung up on it.
For one, DirecTV’s monthly churn rate declined 0.02 percentage points to 1.41 percent in the fourth-quarter. For another, free cash flow was way up, increasing 84 percent on the year in the fourth-quarter to $1 billion. For yet another, encouraged by all its new cash, the company authorized $3.5 billion in additional stock repurchases.
“Our fourth-quarter results capped off another solid year for DIRECTV, as we finished the year with nearly 38 million customers across the Americas, maintaining our standing as the world’s largest and most popular video service,” said Mike White , president and CEO of DirecTV, in the company’s earnings report. “We exit 2013 with good momentum. In the U.S., we are well-positioned to continue strengthening DIRECTV’s competitiveness in the marketplace as the premier provider of video services by advancing our customer franchise, while delivering mid-single digit top and bottom line growth in 2014.”
Analysts are currently on the same page as White. Analysts are expecting 5.4 percent revenue growth in 2014 to $33.33 billion, and 16 percent earnings growth to $5.76 per share. For the coming quarter, analysts are looking for 4.3 percent revenue growth to $7.91 billion, and earnings growth of 21.7 percent to $1.46 per share.