It has been about a month since the last earnings report for ViaSat (VSAT). Shares have added about 1.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is ViaSat due for a pullback? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Viasat Misses Earnings and Revenue Estimates in Q2
Viasat reported weak second-quarter fiscal 2023 results, missing both the bottom-line and top-line estimates.
The weaker-than-expected results were attributable to the increased ground network costs for the upcoming ViaSat-3 American Satellite, increased R&D investments, alterations in the product mix and government product shipments that were affected by supply chain issues. Nevertheless, the company is experiencing growth in the IFC (In-Flight Connectivity) business and has received contributions from the recent RigNet and EBI acquisitions.
Bottom Line
Net loss from continuing operations in the quarter was $72.7 million or a loss of 97 cents per share compared with a net loss of $21.3 million or a loss of 32 cents per share in the prior-year quarter. The loss was primarily due to higher provision for income tax expense. The bottom line was wider than the Zacks Consensus Estimate of an earnings of 22 cents.
Revenues
Revenues improved to $656.7 million from $609.2 million in the prior-year quarter. The growth was backed by higher product and service revenues, up 15% and 4% respectively to $254.9 million and $401.8 million. Revenues missed the Zacks Consensus Estimate by $100 million.
Segment Revenues
The Satellite Services generated $300.5 million in revenues – flat year over year as commercial IFC service revenue growth was offset by a decline in fixed broadband revenues due to capacity allocations and fewer residential subscribers. Adjusted EBIDTA decreased 15% to $92 million due to higher ViaSat-3 ground network activation expenditures and lower broadband subscriber base.
The Commercial Networks segment generated $180 million in revenues, reflecting growth of 34% from the prior-year quarter due to Acacia payment. Adjusted EBIDTA was $21 million.
The Government Systems segment generated $176.1 million in revenues from continuing operations, up 1.1% year over year. Adjusted EBIDTA from continuing operations increased 2% to $41 million due to lower R&D expenses.
Other Details
During the quarter, ViaSat reported an operating income of $1.1 million against an operating loss of $24.4 million in the prior-year quarter. Adjusted EBIDTA in the quarter was $188 million compared with $155 million in the prior-year quarter. The increase was due to Acacia payment and higher IFC businesses.
Cash Flow & Liquidity
During the first six months of fiscal 2023, ViaSat generated $228.1 million in operating cash flow compared with $227.8 million in the year-ago period. Cash and cash equivalents as of Sep 30, 2022, were $149.2 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -596.43% due to these changes.
VGM Scores
Currently, ViaSat has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren’t focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It’s no surprise ViaSat has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
ViaSat belongs to the Zacks Wireless Equipment industry. Another stock from the same industry, Juniper Networks (JNPR), has gained 10.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.
Juniper reported revenues of $1.41 billion in the last reported quarter, representing a year-over-year change of +19%. EPS of $0.58 for the same period compares with $0.46 a year ago.
Juniper is expected to post earnings of $0.65 per share for the current quarter, representing a year-over-year change of +16.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Juniper. Also, the stock has a VGM Score of D.
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