With shares of Dish Network (NASDAQ:DISH) trading around $39, is DISH an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let's analyze the stock with the relevant sections of our CHEAT SHEET investing framework:
T = Trends for a Stock’s Movement
Dish Network is a pay-television provider that offers a range of local and national programming, featuring more national and local high definition channels than most pay-TV providers. A rising number of consumers are opting for satellite services due to the reduced costs and increased coverage offered. Dish Network is poised to capitalize on this rise in consumer interest as entertainment takes the center stage for consumers in the United States. As a television giant, look for Dish Network to provide the services that consumers and companies love.
T = Technicals on the Stock Chart are Strong
Dish Network stock has shot higher over the last several years and is now trading at prices not seen since the early-to-mid 2000s. The stock looks ready to continue higher but it may need some time to digest current prices. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Dish Network is trading near its rising key averages, which signal neutral to bullish price action in the near-term.
(Source: Thinkorswim)
Taking a look at the implied volatility (red) and implied volatility skew levels of Dish Network options may help determine if investors are bullish, neutral, or bearish.
| Implied Volatility (IV) | 30-Day IV Percentile | 90-Day IV Percentile | |
| Dish Network Options | 42.89% | 86% | 84% |
What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.
| Put IV Skew | Call IV Skew | |
| July Options | Steep | Average |
| August Options | Steep | Average |
As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.
On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.
E = Earnings Are Decreasing Quarter-Over-Quarter
Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Dish Network’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Dish Network look like and more importantly, how did the markets like these numbers?
| 2013 Q1 | 2012 Q4 | 2012 Q3 | 2012 Q2 | |
| Earnings Growth (Y-O-Y) | -41.25% | -34.09% | -149.30% | -33.33% |
| Revenue Growth (Y-O-Y) | -0.74% | -1.15% | -2.20% | -0.51% |
| Earnings Reaction | -2.04% | -0.16% | 3.35% | -0.22% |
Dish Network has seen decreasing earnings and revenue figures over the last four quarters. From these numbers, the markets have not been too excited about Dish Network’s recent earnings announcements.
P = Average Relative Performance Versus Peers and Sector
How has Dish Network stock done relative to its peers, Directv (NYSE:DTV), Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC), and sector?
| Dish Network | Directv | Comcast | Time Warner Cable | Sector | |
| Year-to-Date Return | 7.66% | 26.83% | 8.73% | 6.62% | 8.15% |
Dish Network has been an average performer, year-to-date, with greater or relatively equal return in comparison to its competitors.
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Dish Network is a provider of local and national television programming offering more channel options than many other providers. The stock is on a bullish run and is trading at prices not seen since the mid-2000s. Over the last four quarters, investors have not been to excited with the company as earnings and revenue figures have been decreasing. Relative to its peers and sector, Dish Network has been an average performer, year-to-date. WAIT AND SEE what Dish Network does in coming quarters.
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