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Telecommunications and cable services provider Altice USA (NYSE:ATUS) fell short of the markets revenue expectations in Q3 CY2025, with sales falling 5.4% year on year to $2.11 billion. Its GAAP loss of $3.47 per share was significantly below analysts’ consensus estimates.

Company Overview

Based in Long Island City, Altice USA (NYSE:ATUS) is a telecommunications company offering cable, internet, telephone, and television services across the United States.

The massive physical footprints of cell phone towers, fiber in the ground, or satellites in space make it challenging for companies in this industry to adjust to shifting consumer habits. Over the last decade-plus, consumers have ‘cut the cord’ to their landlines and traditional cable subscriptions in favor of wireless communications and streaming video. These trends do mean that more households need cell phone plans and high-speed internet. Companies that successfully serve customers can enjoy high retention rates and pricing power since the options for mobile and internet connectivity in any geography are usually limited.

Competitors in the telecommunications and media services sector include Comcast (NASDAQ:CMCSA), Charter Communications (NASDAQ:CHTR), and DISH Network (NASDAQ:DISH).

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Altice’s demand was weak and its revenue declined by 2.5% per year. This was below our standards and is a sign of poor business quality.

We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Altice’s recent performance shows its demand remained suppressed as its revenue has declined by 3.6% annually over the last two years.

Altice also discloses its number of broadband subscribers and pay tv subscribers, which clocked in at 3.87 million and 1.67 million in the latest quarter. Over the last two years, Altice’s broadband subscribers averaged 3.6% year-on-year declines while its pay tv subscribers averaged 13% year-on-year declines.

This quarter, Altice missed Wall Street’s estimates and reported a rather uninspiring 5.4% year-on-year revenue decline, generating $2.11 billion of revenue.

Looking ahead, sell-side analysts expect revenue to decline by 3.1% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and suggests its newer products and services will not catalyze better top-line performance yet.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Altice’s operating margin has been trending down over the last 12 months and averaged 8.3% over the last two years. The company’s profitability was mediocre for a consumer discretionary business and shows it couldn’t pass its higher operating expenses onto its customers.

This quarter, Altice generated an operating margin profit margin of negative 55.3%, down 75.2 percentage points year on year. This contraction shows it was less efficient because its expenses increased relative to its revenue.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Altice, its EPS declined by 88.3% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

In Q3, Altice reported EPS of negative $3.47, down from negative $0.09 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Altice to improve its earnings losses. Analysts forecast its full-year EPS of negative $3.96 will advance to negative $0.05.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Altice broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.

Altice burned through $178.1 million of cash in Q3, equivalent to a negative 8.4% margin. The company’s cash flow turned negative after being positive in the same quarter last year, prompting us to pay closer attention. Short-term fluctuations typically aren’t a big deal because investment needs can be seasonal, but we’ll be watching to see if the trend extrapolates into future quarters.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Altice historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Altice’s ROIC has decreased over the last few years. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.

Altice’s $26.37 billion of debt exceeds the $939 million of cash on its balance sheet. Furthermore, its 8× net-debt-to-EBITDA ratio (based on its EBITDA of $3.27 billion over the last 12 months) shows the company is overleveraged.

At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Altice could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.

We hope Altice can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.

We struggled to find many positives in these results. Its EPS missed and its revenue fell slightly short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 3% to $2.11 immediately following the results.

Updated: November 23, 2025 at 10:05 PM EST

A common mistake we notice when investors are deciding whether to buy a stock or not is that they simply look at the latest earnings results. Business quality and valuation matter more, so we urge you to understand these dynamics as well.

We cheer for all companies serving everyday consumers, but in the case of Altice, we’ll be cheering from the sidelines. For starters, its revenue has declined over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its projected EPS for the next year implies the company’s fundamentals will improve, the downside is its number of broadband subscribers has disappointed. On top of that, its declining EPS over the last five years makes it a less attractive asset to the public markets.

Altice’s EV-to-EBITDA ratio based on the next 12 months is 0.2x. While this valuation is fair, the upside isn’t great compared to the potential downside. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $2.48 on the company (compared to the current share price of $1.79).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.