ViaSat (VSAT) Down 2.3% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for ViaSat (VSAT). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is ViaSat due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Viasat Q2 Loss Narrower Than Expected, Revenues Rise

Viasat reported better-than-expected results in the second quarter of fiscal 2019.

Net Loss

On a GAAP basis, net loss in the reported quarter totaled $25.7 million or a loss of 43 cents per share compared with net loss of $13.7 million or a loss of 24 cents in the year-ago quarter. The deterioration in the bottom line despite top-line growth was primarily due to higher operating expenses on account of rise in fixed operating expenses related to the launch of ViaSat-2 service.

In the reported quarter, non-GAAP net loss was $9 million or a loss of 15 cents per share against net income of $5.2 million or 9 cents in the year-earlier quarter. Notably, adjusted loss was narrower than the Zacks Consensus Estimate of a loss of 34 cents.

Revenues

Quarterly total revenues increased 31.6% year over year to $517.5 million, primarily driven by strong performance in its all three segments. Also, the top line surpassed the Zacks Consensus Estimate of $465 million.

Segmental Performance

Revenues at Satellite Services increased 10.4% year over year to $163 million. The segment’s operating loss was $24.8 million against a profit of $12.6 million in the year-ago quarter. Adjusted EBITDA was $39.9 million, down 28.1% year over year. The decline was due to the rise in fixed operating expenses related to the launch of ViaSat-2 service.

Commercial Networks revenues were up 103.5% year over year to $114.5 million, primarily driven by continued strong performance in the company's scaling IFC equipment business. Operating loss was $39.2 million compared with a loss of $59.4 million in the year-ago quarter. Adjusted EBITDA was a negative $24.6 million compared with a negative $45 million a year ago, reflecting decline in R&D expenses.

Government Systems revenues increased 26.8% year over year to $240 million, driven by new contract awards. Operating profit was $44.9 million, up 31.2% year over year. Adjusted EBITDA was $62.2 million, up 20.8% year over year, reflecting solid demand for the company’s unique Non-Developmental Item products, as well as government mobile broadband products and service.

Liquidity

As of Sep 30, 2018, Viasat had $44.5 million of cash and cash equivalents compared with $71.4 million as of Mar 31, 2018. The company’s long-term debt was $460.1 million compared with $287.5 million as of Mar 31, 2018.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.84% due to these changes.

VGM Scores

At this time, ViaSat has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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 has been net zero. Notably, ViaSat has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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