DirecTV (NASDAQ: DTV) is the largest direct-broadcast satellite service in the United States and is far ahead of ahead of #2, Dish Network (NASDAQ: DISH). And in my book, this media stock is a great buy right now.
And DirecTV is the gold standard in satellite service. Cable providers have all continued to lose customers in the latest quarters as they have been unable to upgrade their services enough to compete with DirecTV’s massive offerings. DirecTV continues to add more customers (100,000 in the second quarter in the US alone), and now is putting more nails in cable’s coffin by teaming up with phone companies, primarily Verizon (NYSE: VZ), which is now bundling DirecTV’s video services with its own voice and Internet packages.
In addition to its more than 18.8 million US customers, the company serves more than six million subscribers in Latin America under the DirecTV and Sky brands, where it is striving to double its total subscribers by 2016.
In the second quarter, DirecTV’s sales rose +12.5% to $5.85 billion. During the same period, earnings increased 33% overall to $543 million, or 42 cents per share, compared with $407 million, or 40 cents per share. But on a per share basis, its earnings gained 5% because there are more shares outstanding after former chairman John Malone swapped his Class B shares for Class A shares. Without the Malone stock swap, DirecTV’s second-quarter per-share earnings would have risen 50% to 60 cents a share.
For the third quarter, analysts expect 9% annual sales growth and 51.4% earnings growth. In the second quarter alone, the company added 415,000 subscribers, so Latin America will be an important source of growth for the next several years, where its services include high-definition and video-on-demand programming.
Analysts have revised their consensus earnings estimate 7.9% higher in the past three months. Typically, strong analyst earnings revisions precede future earnings surprises. Buy DirecTV below $41.
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As of this writing, Louis Navellier was recommending DirecTV in his Blue Chip Growth newsletter.
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