Dish Network Stock More Than Doubled in One Year: Still a Buy?

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We believe Dish Network Stock (NASDAQ: DISH) has the potential to provide an additional 10% return to its investors. DISH is currently trading at $ 37 and is, in fact, down 6% since the start of 2020, when it was at $ 35. It traded at $ 41 in February 2020 – just before the coronavirus pandemic hit the world – and is currently nearly 10% below that level. Despite being below its pre-Covid levels, DISH’s stock has more than doubled from its March 2020 low of $ 18. This compares favorably to the overall market (S&P 500) which grew 82% during this period. DISH managed to outperform the market as a whole with better than expected results in Q2, Q3 and Q4 2020, benefiting from the acquisitions of Boost Mobile and Ting Mobile. The gradual opening up of the economy should lead to a pick-up in consumer spending over the next few quarters. This will push commercial / industrial customers to come back to its fold as the current crisis gradually eases. Additionally, as the company continues to expand towards 5G, revenue growth is expected to improve in 2021 and 2022, which is expected to push the stock up an additional 10% despite an increase of over 100% since March 2020. Our conclusion is as follows: based on the comparative analysis of Dish Network’s Stock Performance During the Current Financial Crisis Against That of the 2008 Recession in our dashboard.

Coronavirus crisis 2020

Timeline of the 2020 crisis so far:

  • 12/12/2019: Coronavirus cases first reported in China
  • 01/31/2020: WHO declares global health emergency.
  • 02/19/2020: Signs of effective containment in China and monetary easing hopes from major central banks help S&P 500 reach record high
  • 03/23/2020: S&P 500 34% drop from the peak level seen on February 19, 2020, as COVID-19 cases accelerate outside China. It doesn’t help that oil prices collapse in mid-March amid a Saudi-led price war
  • Since 03/24/2020: S&P 500 recovers 82% since the lows seen on March 23, 2020, as the Fed’s multibillion-dollar stimulus package removes short-term survival anxiety and injects liquidity into the system.

In contrast, here is how the DISH share and the market in general behaved during the crisis of 2007-08.

Timeline of the 2007-08 crisis

  • 1/10/2007: Approximate pre-crisis peak of the S&P 500 index
  • 9/1/2008 – 10/1/2008: Accelerated decline in the market corresponding to Lehman’s bankruptcy filing (09/15/08)
  • 03/01/2009: Approximate low of the S&P 500 index
  • 12/31/2009: Initial recovery to levels before accelerated decline (around 09/01/2008)

Performance of DISH and the S&P 500 during the 2007-08 financial crisis

DISH stock fell from levels of around $ 38 in September 2007 (pre-crisis peak) to levels of $ 11 in March 2009 (as markets bottomed out), implying that the DISH stock has lost more than 70% from its approximate pre-crisis peak. It recovered after the 2008 crisis, reaching levels close to $ 21 in early 2010, up 85% between March 2009 and January 2010. In comparison, the S&P 500 index fell by 51% and recovered by 48%.

Basic principles of DISH in recent years

DISH turnover grew from $ 14.4 billion in 2017 to $ 12.8 billion in 2019 due to declining subscriber-related revenue as more users switch to SVOD (streaming video on demand) platforms , like Netflix
NFLX
and Amazon
AMZN
. However, revenue soared in 2020 to $ 15.5 billion, the highest level in recent years, mainly due to two major acquisitions. Despite the overall increase in revenues, margins have declined in recent years, with EPS dropping from $ 4.50 in 2017 to $ 3.36 in 2020, mainly due to the rising cost of services and equipment. , as well as depreciation charges.

Does DISH have enough leeway to meet its obligations during the coronavirus crisis?

DISH’s total debt grew from $ 15.1 billion in 2017 to $ 13.6 billion at the end of 2020, while its total cash flow grew from $ 2 billion to $ 3.7 billion during the same period. In addition, DISH has generated healthy operating cash flow of $ 3.3 billion in the past 12 months, while there has been an outflow of cash from investments of approximately $ 4 billion. Although debt levels remain high, which remains a risk for the business, it is unlikely to translate into a crisis as the cash balance and operating cash flow of the business keeps it down. provide a reasonable amount of liquidity to service this debt.

Conclusion

Phases of the Covid-19 crisis:

  • Beginning to mid-March 2020: Fear of the rapidly spreading coronavirus epidemic results in reality, with an acceleration in the number of cases worldwide
  • End of March 2020 and beyond: social distancing measures + lockdowns
  • April 2020: Nourished stimulation suppresses short-term survival anxiety
  • May-June 2020: Resumption of demand, with progressive lifting of locks – no more panic despite a steady increase in the number of cases
  • Since the end of 2020: weak, but persistent quarterly results demand improvement and advances in vaccine development boost market sentiment

Despite the recent rise in the number of new cases of Covid-19 in the United States, we anticipate continued improvement in demand, further aided by the successful deployment of vaccines, to support market expectations. As investors focus on the expected results for 2021 and 2022, we believe DISH Network’s action has the potential to make modest gains once fears surrounding the Covid epidemic allay. Currently, investors appear to be supported by the closing of Dish’s acquisition of Boost Mobile on July 1, 2020, which officially marks Dish’s entry into the wireless retail market. Additionally, Dish’s ambitious 5G rollout plan appears to be on track, with the company planning to cover around 70% of the US population by mid-2023. According to Dish Network Rating According to Trefis, the fair value of the DISH share stands at $ 40 per share, reflecting a potential rise of about 10% from its current level.

5G wireless technology is a hot trend. Which stocks should you choose? Discover our theme on 5G actions for more details.

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