Will Dish Network Continue Its Bullish Run?

With shares of Dish Network (NASDAQ:DISH) trading around $49, 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 reported revenue totaling $3.60 billion for the quarter ending Sept. 30, 2013 compared to $3.52 billion for the corresponding period in 2012. Subscriber related revenue increased 6.1 percent to $3.47 billion from $3.27 billion in the year-ago period.

T = Technicals on the Stock Chart Are Strong

Dish Network stock has been steadily trending higher in the past several years. The stock is currently trading near all time highs and looks set to continue. 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 signal neutral to bullish price action in the near-term.

DISH

(Source: Thinkorswim)

Taking a look at the implied volatility (red) 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

33.72%

0%

0%

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

Put IV Skew

Call IV Skew

December Options

Flat

Average

January 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 minimal amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

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 Q3

2013 Q2

2013 Q1

2012 Q4

Earnings Growth (Y-O-Y)

N/A

-104.00%

-41.25%

-34.09%

Revenue Growth (Y-O-Y)

2.27%

1.12%

-0.74%

-1.15%

Earnings Reaction

4.91%*

0.44%

-2.04%

-0.16%

Dish Network has seen decreasing earnings and mixed revenue figures over the last four quarters. From these numbers, the markets 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

36.87%

26.81%

20.90%

25.00%

28.39%

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 recently announced its third quarter results. The stock has been steadily trending higher over the last several years and is currently trading near all time highs. Over the last four quarters, earnings have been decreasing while revenues have been mixed, which has produced conflicting feelings among investors. Relative to its peers and sector, Dish Network has been a year-to-date performance leader. Look for Dish Network to OUTPERFORM.