DIRECTV Earnings: Margins Suffer for Five Quarters Straight, but Profit Climbs

S&P 500 (NYSE:SPY) component DIRECTV (NASDAQ:DTV) reported its results for the third quarter. DIRECTV acquires and distributes digital entertainment programming in the U.S. and Latin America.

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DIRECTV Earnings Cheat Sheet

Results: Net income for DIRECTV rose to $565 million (90 cents per share) vs. $516 million (70 cents per share) in the same quarter a year earlier. This marks a rise of 9.5% from the year-earlier quarter.

Revenue: Rose 8.4% to $7.42 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: DIRECTV fell short of the mean analyst estimate of 92 cents per share. It beat the average revenue estimate of $7.04 billion.

Quoting Management: “DIRECTV delivered another strong quarter highlighted by solid revenue, earnings and cash flow growth,” said Mike White, president and CEO of DIRECTV. “We continue to extend our position as the world’s largest pay TV service with industry leading growth by leveraging the strength of our premier brands and distinctive products and services throughout the Americas.”

Key Stats:

Last quarter was the fifth in a row that the company saw shrinking gross margins, as they fell 1.9 percentage points from the year-earlier quarter to 46.6%. In that span, margins have contracted an average of 1.5 percentage points per quarter on a year-over-year basis.

The company has now seen its net income rise for three quarters in a row. In the second quarter, net income rose 1.4% and in the first quarter, the figure rose 8.5%.

Revenue has risen the past four quarters. Revenue increased 9.5% to $7.22 billion in the second quarter. The figure rose 11.5% in the first quarter from the year earlier and climbed 12.7% in the fourth quarter of the last fiscal year from the year-ago quarter.

For two quarters in a row, the company has come in under analyst estimates. In the second quarter, it missed expectations by 5 cents with net income of $1.09 versus a mean estimate of net income of $1.14 per share.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is $1.13 per share, down from $1.16 ninety days ago. At $4.24 per share, the average estimate for the fiscal year has risen over the past seven days from $4.23.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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