Can Dish Network Stock Continue To Rise?

With shares of Dish Network (NASDAQ:DISH) trading around $45, is DISH an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Dish Network is a pay-television provider that offers a range of local and national programming, featuring more national and local high-definition channels than most pay-TV providers. A rising number of consumers are opting for satellite services due to the reduced costs and increased coverage offered. Dish Network is poised to capitalize on this rise in consumer interest as entertainment takes center stage for consumers in the United States.

Dish Network, the second-largest U.S. satellite TV company, swung to a loss last quarter thanks to large impairment charges and a sizable decrease in pay-TV subscriber additions. The maturing of the U.S. subscription television business has not made it easy to attract new subscribers nor has the popularity of online entertainment, only making the situation worse.

T = Technicals on the Stock Chart are Strong

Dish Network has been steadily rising over the past several years. The stock is now trading near a long-term selling zone that was most prominent back in 2007. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Dish Network is trading above its rising key averages, which signals neutral to bullish price action in the near term.

DISH

Source: Thinkorswim

Taking a look at the implied volatility and implied volatility skew levels of Dish Network options may help determine if investors are bullish, neutral, or bearish.

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Dish Network Options

40.65%

13%

10%

What does this mean? This means that investors or traders are buying a small amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

August Options

Flat

Average

September Options

Flat

Average

As of today, there is an average demand from call buyers or sellers, and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a small amount of call and put option contracts and are leaning neutral to bullish over the next two months.

E = Earnings are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Dish Network’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Dish Network look like and more importantly, how did the markets like these numbers?

2013 Q2

2013 Q1

2012 Q4

2012 Q3

Earnings Growth (Y-O-Y)

-104.00%

-41.25%

-34.09%

-149.30%

Revenue Growth (Y-O-Y)

1.12%

-0.74%

-1.15%

-2.20%

Earnings Reaction

0.45%*

-2.04%

-0.16%

3.35%

Dish Network has seen decreasing earnings and mixed revenue figures over the last four quarters. From these numbers, the markets have had conflicting feelings about Dish Network’s recent earnings announcements.

* As of this writing.

P = Excellent Relative Performance Versus Peers and Sector

How has Dish Network stock done relative to its peers – DirecTV (NASDAQ:DTV), Time Warner Cable (NYSE:TWC), Comcast (NASDAQ:CMCSA) — and sector?

Dish Network

DirecTV

Time Warner Cable

Comcast

Sector

Year-to-Date Return

23.46%

21.67%

17.25%

20.21%

19.47%

Dish Network has been a relative performance leader, year-to-date.

Conclusion

Dish Network offers a television subscription service that provides national and local programming to consumers in the United States. The company has recently been struggling with subscribers but is looking for methods to bounce back. The stock has been trending higher in recent years and is now near 2007 prices. Over the last four quarters, investors in the company have had conflicting feelings, as earnings have been decreasing while revenue figures have been mixed. Relative to its peers and sector, Dish Network has been a year-to-date performance leader. Look for Dish Network to OUTPERFORM.

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