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United States Cellular
(NYSE:USM)
Rating:64Neutral
Price Target:―
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
$81.50Price 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
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.65
Positive
Balance Sheet
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.72
Positive
Cash Flow
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.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| 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
Positive
62.56
Price Trends
64.37
Negative
64.73
Negative
62.18
Positive
Market Momentum
-0.42
Negative
49.27
Neutral
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 3 New Risks
1.
1)TDS and UScellular entered into a Securities Purchase Agreement dated as of May 24, 2024 with T-Mobile and USCC Wireless Holdings, LLC, pursuant to which, among other things, UScellular has agreed to sell its wireless operations and select spectrum assets to T-Mobile. In addition, UScellular, and certain subsidiaries of UScellular, entered into the Verizon Purchase Agreement on October 17, 2024, and the AT&T Purchase Agreement on November 6, 2024 to sell certain wireless spectrum licenses. There is no guarantee that the transactions contemplated by the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement will be able to be consummated or that UScellular will be able to find buyers at mutually agreeable prices for its spectrum assets not subject to the Securities Purchase Agreement, the Verizon Purchase Agreement, or the AT&T Purchase Agreement. Costs and uncertainties related to the transactions could have adverse effects on UScellular's financial condition or results of operations. Q4, 2024
2.
3)If the T-Mobile, Verizon and AT&T transactions are consummated, substantial costs will be triggered and substantial changes will be required to the manner in which UScellular's remaining business is conducted, which could have a material adverse effect on UScellular's financial condition and results of operations. Q4, 2024
3.
2)If the T-Mobile, Verizon and AT&T transactions are not consummated, substantial changes will be required to the manner in which UScellular's wireless business is conducted, and we expect there will be a material adverse effect on UScellular's financial condition and results of operations. Q4, 2024
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 |
|---|---|---|---|---|---|---|---|
76 Outperform | $5.41B | 13.17 | 6.74% | 2.40% | 14.09% | -11.43% | |
73 Outperform | $8.20B | 9.14 | 11.08% | 5.19% | -2.34% | 12.31% | |
72 Outperform | $4.84B | 9.06 | 28.10% | 5.45% | -0.91% | 11.25% | |
64 Neutral | $5.34B | ― | -0.84% | ― | -3.48% | -169.60% | |
61 Neutral | $14.60B | 5.88 | -4.32% | 3.68% | 2.75% | -30.55% | |
56 Neutral | $764.70M | 59.21 | -1.12% | 8.68% | -6.30% | -109.90% | |
55 Neutral | $4.28B | 20.81 | 3.99% | ― | -12.77% | 40.80% |
* Communication Services Sector Average
Performance Comparison
USM
United States Cellular
62.56
9.21
17.26%
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22.42
-0.79
-3.40%
SKM
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21.62
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3.69%
TEO
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9.46
2.49
35.72%
TKC
Turkcell Iletisim
6.44
-0.67
-9.42%
CABO
Cable ONE
135.87
-223.23
-62.16%
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
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.