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Why U.S. Cellular (USM) is a Top Stock for 2016
Headquartered in Chicago, Illinois, U.S. Cellular Corp USM is the fifth largest wireless company in the United States, with 4.8 million customers in 426 markets in 23 states (as of Q3 FY15). The company's development strategy is to operate controlling interests in cellular market licenses in areas adjacent to or in proximity to its other markets. This lets U.S. Cellular build clusters in operating markets.
Let's take a look at why USM is a top stock for 2016.
Notable Zacks Rank
Currently, U.S. Cellular is sitting at a Zacks Rank #1 (Strong Buy), brought on by recent positive earnings estimate revision activity. Over the last 60 days, current quarter estimates have risen to $-0.43 per share from $-0.58 per share, while the current year estimates have increased from $2.10 to $2.33 per share.
Investors should also take note that U.S. Cellular's industry, National Wireless, is 68 of 265 total industries ranked on the Zacks Industry Rank, falling in the top 26%. This suggests good standing for the first part of a new year, especially in comparison to other industries out there.
Strong Style Scores
As well as a Strong Buy ranking, U.S. Cellular's Zacks Style Scores are impressive.
Growth
Holding an 'A' in this category, the company has a current cash flow growth of 6%, a debt/capital ratio of 27.75%, and a net margin of 5.52%. These numbers might not be too eye-catching on their own but compared to its industry-0.10%, 50.53%, and 0.93%, respectively-U.S. Cellular's Growth numbers stand out.
Value
Despite a score of 'C,' U.S. Cellular still has strong Value scores. It's Price to Cash Flow ratio is 6.26, and its Price to Sales ratio is 0.78.
Momentum
Falling in between its Growth and Value scores is U.S. Cellular's Momentum Score of a 'B.' Compared to its industry, the company is excelling in the momentum categories, with both a positive 52 week price change of 4.31% and an EPS estimated quarterly change of 267.86%.
2015 Performance
U.S. Cellular's fiscal 2015 is not yet over, but their performance so far this year has been very positive. In their Q3 earnings report, the company raised its full-year 2015 outlook for operating cash flow and adjusted EBITDA.
The wireless provider has also posted positive earnings surprises in all of the prior four quarters, with an average earnings beat of 1,836.07%. For full-year 2015, U.S. Cellular's EPS is expected to grow a huge 286.60%.
Bottom Line
U.S. Cellular is poised for a fatalistic 2016, with enviable Zacks Rank and Zacks Style Scores pointing towards increased growth and positive earnings estimates revisions. Right now, USM is a fantastic stock to add to your portfolio, and one that should not be overlooked.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
