We recently wrote about the potential of EchoStar, a company that could benefit from the growing popularity of satellite internet and space services. The Q1 2022 results presented by the company were very solid:
- Revenue was $501.5 billion, up $19 million from Q1 2021
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- Earnings per share (EPS) was $1.07, EBITDA was nearly $166 million
The company conducted a shares buyback in Q1 2022 and repurchased 1462092 shares in open market transactions, thus confirming its credibility in the eyes of shareholders and confidence in the long-term prospects of the business. Management also confirmed that the Jupiter 3 satellite, which will dramatically increase the company's market opportunities, is scheduled for launch in Q1 2023.
Commenting on the successful quarterly report, the company's new CEO Hamid Akhavan said, "The EchoStar team delivered solid results in the first quarter of this year, continuing a consistent policy of fiscal responsibility (...) As we take stock of our strengths and begin to chart a new course for growth, I couldn't ask for a more talented, technologically proficient organization to capitalize on the wonderful opportunities presented by the rapid changes in our industry."
Revenue increased primarily from equipment sales to domestic and international customers. Net income, in turn, increased primarily from lower interest expense and favorable foreign exchange on equipment sales. In contrast, higher tax expense negatively impacted profitability.
HughesNet broadband subscribers were approximately 1,406,000, a decrease of nearly 56,000 from Q4 2021. The decrease in subscribers was primarily related to customer selection and deteriorating economic conditions in South America, which resulted in lower demand for higher priced satellite services.
The company's price to book value ratio, which currently stands at 0.62, still makes the stock attractive to investors looking for investment opportunities in the satellite market.
The fundamental threat for the company are still difficulties with Jupiter3 satellite delivery and progressing outflow of customers. At the same time, it is worth mentioning that the company enters into more and more governmental contracts with, among others, the U.S. Department of Defense and OneWeb, which means that the demand for development of U.S. space capabilities may support Echostar's business growth.
Echostar (SATS.US) shares, H4 interval. The price of Echostar shares reacted with demand several times in the zone determined by the 23.6 Fibonacci retracement near 22 USD, stopping the decline. The growth caused by the successful report was quickly erased due to the weakening sentiment around the US indices. If the bulls return, the key resistance remains the 26 USD zone, where the 61.8 Fibo retracement is located, while the supply may have problems with pushing the price below 22 USD, so it is likely that the price will move in this zone until the general market sentiment improves. Source: xStation 5
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