Long-established in the Telecommunication Services industry, DISH Network Corp (DISH, Financial) has enjoyed a stellar reputation. It has recently witnessed a surge of 4.41%, juxtaposed with a three-month change of -15.41%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of DISH Network Corp.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 4/10
- 2. Profitability rank: 7/10
- 3. Growth rank: 5/10
- 4. GF Value rank: 2/10
- 5. Momentum rank: 4/10
Based on the above method, GuruFocus assigned DISH Network Corp the GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding DISH Network Corp's Business
From its founding in the 1980s, DISH Network Corp has primarily focused on the satellite television business, capitalizing on technological advancements to expand its reach. The firm now serves 7 million U.S. customers. Dish launched an internet-based television offering under the Sling brand in 2015 and now serves about 2 million customers on this platform. Dish's future, however, hinges primarily on the wireless business. The firm has amassed a large portfolio of spectrum licenses over the past 15 years, spending about $30 billion in the process, and is now building a nationwide wireless network. It acquired Sprint's prepaid business and now serves about 8 million customers. Dish plans to merge with EchoStar, a firm it spun out in 2008 that provides satellite-based communications services.
Financial Strength Breakdown
DISH Network Corp's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 0.81, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.07 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 7.3, which is above Joel Tillinghast's warning level of 4 and is worse than 87.5% of 312 companies in the Telecommunication Services industry. Tillinghast said in his book “Big Money Think's Small: Biases, Blind Spots, and Smarter Investing” that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Looking Ahead
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While DISH Network Corp has a rich history and a strong market presence, these indicators suggest that it may struggle to maintain its performance in the future. As value investors, it's crucial to consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
