United States Cellular (USM) AI Stock Analysis

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United States Cellular

(NYSE:USM)

Rating:64Neutral

Price Target:―

United States Cellular's overall score reflects strong cash flow management and strategic initiatives like fiber expansion and debt reduction. However, declining service revenues, negative earnings, and poor technical indicators weigh on the stock. Valuation remains a concern due to negative earnings and lack of dividends, while risks surrounding subscriber growth and competitive pressures persist.

Positive Factors

Asset Divestitures

SOTP implies more headroom to equity value unlock from asset divestitures.

Service Revenue and Cost Optimization

Improved service revenue and ongoing cost optimization efforts lead to a raised 2025 EBITDA forecast for USM.

Value Unlock and Capital Returns

USM remains a top Mid-Cap pick due to additional opportunities for value unlock and substantial capital returns to shareholders.

Negative Factors

Spectrum Divestiture Timeline

USM reiterated its wireless operations and spectrum divestiture to TMUS is expected to close in mid-2025.

Towers Strategy

Lingering questions regarding Towers strategy long-term.

United States Cellular (USM) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$5.34B

Dividend YieldN/A

Average Volume (3M)266.81K

Price to Earnings (P/E)―

Beta (1Y)0.17

Revenue Growth-3.48%

EPS Growth-169.60%

CountryUS

Employees4,100

SectorCommunication Services

Sector Strength86

IndustryTelecommunications Services

Share Statistics

EPS (TTM)0.21

Shares Outstanding52,023,384

10 Day Avg. Volume288,500

30 Day Avg. Volume266,809

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)1.17

Price to Sales (P/S)0.00

P/FCF Ratio15.11

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$81.50

Price Target Upside30.27% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

United States Cellular Business Overview & Revenue Model

Company DescriptionUnited States Cellular Corporation provides wireless telecommunications services in the United States. The company offers wireless services, including voice, messaging, and data services. It also provides devices, such as smartphones and other handsets, tablets, wearables, mobile hotspots, routers, and internet of things devices. In addition, the company offers various accessories, such as cases, screen protectors, chargers, and memory cards; and consumer electronics, including audio, home automation, and networking products; as well as offers option to purchase devices and accessories under installment contracts. Further, the company offers roaming, wireless eligible telecommunications carrier, and wireless tower rental services. It serves consumer, business, and government customers with 5.0 million connections, including 4.4 million postpaid, 0.5 million prepaid, and 0.1 million reseller and other connections in 21 states. The company provides its products and services through retail sales, direct sales, third-party national retailers, and independent agents, as well as e-commerce and telesales. The company was incorporated in 1983 and is headquartered in Chicago, Illinois. United States Cellular Corporation is a subsidiary of Telephone and Data Systems, Inc.

How the Company Makes MoneyUnited States Cellular makes money primarily through its subscription-based services. The company's revenue streams include postpaid and prepaid wireless plans, which provide recurring monthly income from individual and family customers. US Cellular also generates revenue from data packages and roaming charges. Additionally, the sale of mobile devices and accessories contributes to its earnings. The company leverages partnerships with device manufacturers and network infrastructure providers to enhance its service offerings. US Cellular's focus on customer service and competitive pricing also plays a significant role in attracting and retaining subscribers, thus sustaining its revenue base.

United States Cellular Earnings Call Summary

Earnings Call Date:May 02, 2025

(Q1-2025)

% Change Since: -9.14%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call presented a balanced view with significant progress on strategic transactions and fiber expansion, yet faced challenges with customer retention and competitive pressures. While there were noteworthy achievements in financial flexibility and free cash flow growth, the company also dealt with negative net additions and pricing pressures.

Q1-2025 Updates

Positive Updates

Progress on T-Mobile Transaction

The organization is making significant progress on various activities in preparation for a successful mid-2025 closing of the transaction with T-Mobile, which includes financial, separation, integration, and transition work.

Fiber Program Expansion

The fiber program expanded the footprint over 30% in the last three years, with future growth opportunities identified. TDS Telecom delivered 14,000 new fiber service addresses in the quarter and remains confident in achieving the 150,000 fiber addresses goal for the year.

Increase in Free Cash Flow

UScellular generated $79 million of free cash flow in Q1 2025, an $18 million increase over the same quarter last year, due to cost optimization and flat operating expenses.

Third-Party Tower Revenue Growth

An increase of 6% in third-party tower revenue was achieved due to new colocations and escalators on renewed leases.

Negative Updates

Negative Net Adds in Handset Customers

Despite improvements, UScellular experienced negative net adds and ongoing losses of handset customers, putting pressure on service revenues.

Spectrum Transaction Pricing Adjustment

UScellular does not expect to receive most of the $100 million contingent on certain performance metrics with T-Mobile, likely reducing the purchase price to much closer to $4.3 billion.

Lower Fiber Net Adds Due to Seasonality

Fiber net additions were lower than prior quarters due to timing of address delivery impacted by cold weather, leading to a slower ramp-up in new subscribers.

Challenge in Competitive Pricing Environment

The industry continues to be promotionally aggressive, with competitors offering device promotions and aggressive pricing, challenging UScellular's ability to sustain high promotional expenses.

Company Guidance

During the TDS and UScellular First Quarter 2025 Operating Results Conference Call, several key metrics and guidance points were discussed. The company anticipates a mid-2025 closing for its proposed transaction with T-Mobile, which is contingent upon regulatory approval. Financial flexibility has been ensured by extending bank maturities and amending revolvers in preparation for this transaction. The organization is also preparing for potential special dividends post-transaction, with TDS expected to use its share to repay approximately $1.2 billion in outstanding bank debt. UScellular reported $79 million in free cash flow for the first quarter of 2025, marking an $18 million year-over-year increase. The company expects capital expenditures to decline in 2025 as planned 5G coverage builds are mostly complete, though investments will continue in 5G mid-band deployment. Additionally, the Tower business saw a 6% increase in third-party tower revenue, and TDS Telecom continues to focus on its fiber program, aiming to deliver 150,000 new fiber addresses in 2025. The company has identified $100 million in annual cost savings expected by year-end 2028, which will help mitigate increased costs as they expand their fiber footprint.

United States Cellular Financial Statement Overview

Summary

United States Cellular faces challenges with declining revenue and profitability, as shown by negative net income and EBIT margins. However, strong cash flow management and a solid equity position provide stability. The company needs to address operational inefficiencies and leverage its cash flow strength to improve overall financial health.

Income Statement

Positive

The company's recent annual revenue decreased to $3.77 billion from $3.91 billion, indicating a negative revenue growth rate. The gross profit margin improved significantly to 76.0%, but the net profit margin turned negative with a net loss of $39 million. EBIT margin is also negative, reflecting operational challenges. Despite a robust EBITDA margin of 13.6%, the overall profitability metrics suggest declining performance.

Balance Sheet

Positive

The balance sheet shows a solid equity base with stockholders' equity of $4.58 billion. However, the debt-to-equity ratio is 0.21, indicating manageable leverage levels. The equity ratio cannot be calculated due to missing total assets data, but previous data suggests a stable equity position. Continued high debt levels pose potential risks if profitability does not improve.

Cash Flow

Positive

The company's free cash flow increased significantly, showing a positive growth trend. Operating cash flow is strong at $883 million, and the operating cash flow to net income ratio is robust due to positive cash generation despite a net loss. Free cash flow to net income is also favorable, highlighting efficient cash management.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
3.71B	3.77B	3.91B	4.17B	4.12B	4.04B
	Gross Profit
2.30B	2.86B	2.18B	2.20B	2.21B	2.24B
	EBIT
-9.00M	-12.00M	139.00M	256.00M	376.00M	380.00M
	EBITDA
870.00M	512.00M	1.06B	1.03B	1.13B	1.15B
	Net Income Common Stockholders
-39.00M	-39.00M	54.00M	30.00M	155.00M	229.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
0.00	0.00	150.00M	273.00M	156.00M	1.27B
	Total Assets
0.00	10.98B	10.75B	11.12B	10.34B	9.68B
	Total Debt
3.82B	3.82B	4.03B	4.18B	3.75B	3.48B
	Net Debt
3.64B	3.68B	3.88B	3.90B	3.59B	2.21B
	Total Liabilities
5.75B	5.84B	6.10B	6.54B	5.77B	5.25B
	Stockholders Equity
4.58B	4.58B	4.63B	4.55B	4.55B	4.41B
Cash Flow		Free Cash Flow
355.00M	346.00M	128.00M	-355.00M	-1.24B	47.00M
	Operating Cash Flow
840.00M	883.00M	866.00M	832.00M	802.00M	1.24B
	Investing Cash Flow
-486.00M	-556.00M	-721.00M	-1.18B	-2.04B	-1.16B
	Financing Cash Flow
-363.00M	-347.00M	-274.00M	456.00M	142.00M	926.00M

United States Cellular Technical Analysis

Technical Analysis Sentiment

Positive

Last Price62.56

Price Trends

50DMA

64.37

Negative

100DMA

64.73

Negative

200DMA

62.18

Positive

Market Momentum

MACD

-0.42

Negative

RSI

49.27

Neutral

STOCH

67.75

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For USM, the sentiment is Positive. The current price of 62.56 is above the 20-day moving average (MA) of 61.63, below the 50-day MA of 64.37, and above the 200-day MA of 62.18, indicating a neutral trend. The MACD of -0.42 indicates Negative momentum. The RSI at 49.27 is Neutral, neither overbought nor oversold. The STOCH value of 67.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for USM.

United States Cellular Risk Analysis

United States Cellular disclosed 30 risk factors in its most recent earnings report. United States Cellular reported the most risks in the "Ability to Sell" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

United States Cellular Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TKC	76 Outperform	$5.39B	13.17	6.74%	2.40%	14.09%	-11.43%
SKM	73 Outperform	$8.20B	9.14	11.08%	5.19%	-2.34%	12.31%
PHI	72 Outperform	$4.84B	9.06	28.10%	5.45%	-0.91%	11.25%
USM	64 Neutral	$5.34B	―	-0.84%	―	-3.48%	-169.60%
Sector *	61 Neutral	$14.60B	5.88	-4.32%	3.68%	2.75%	-30.55%
CABO	56 Neutral	$764.70M	59.21	-1.12%	8.68%	-6.30%	-109.90%
TEO	55 Neutral	$4.28B	20.81	3.99%	―	-12.77%	40.80%

* Communication Services Sector Average

Performance Comparison

USM

United States Cellular

62.56

10.47

20.10%

PHI

PLDT

22.42

-0.76

-3.28%

SKM

Sk Telecom

21.62

0.63

3.00%

TEO

Telecom Argentina

9.46

2.56

37.10%

TKC

Turkcell Iletisim

6.44

-0.81

-11.17%

CABO

Cable ONE

135.87

-215.01

-61.28%

United States Cellular Corporate Events

Business Operations and Strategy

UScellular Launches 2025 Annual Incentive Plan

Neutral

Jan 15, 2025

UScellular has introduced its 2025 Annual Incentive Plan, approved by its Chair and CEO on January 13, 2025, which targets motivating its executives by aligning their performance with the company’s business goals. The plan emphasizes company performance, accounting for 80% of the evaluation, based on financial metrics like total service revenues and operating cash flow, while individual performance accounts for the remaining 20%.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.