How the Wheels Came off United States Cellular's Bus

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United States Cellular (NYS: USM) reported earnings on Feb. 24. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), United States Cellular met expectations on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share dropped significantly.

Gross margins dropped, operating margins expanded, net margins dropped.

Revenue details
United States Cellular recorded revenue of $1.10 billion. The five analysts polled by S&P Capital IQ hoped for sales of $1.11 billion on the same basis. GAAP reported sales were 3.4% higher than the prior-year quarter's $1.06 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.04. The six earnings estimates compiled by S&P Capital IQ predicted $0.30 per share on the same basis. GAAP EPS of $0.03 for Q4 were 63% lower than the prior-year quarter's $0.08 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 57.4%, 60 basis points worse than the prior-year quarter. Operating margin was 1.8%, 210 basis points better than the prior-year quarter. Net margin was 0.3%, 30 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.10 billion. On the bottom line, the average EPS estimate is $0.39.

Next year's average estimate for revenue is $4.39 billion. The average EPS estimate is $1.94.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 32 members out of 54 rating the stock outperform, and 22 members rating it underperform. Among 13 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), nine give United States Cellular a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on United States Cellular is hold, with an average price target of $35.75.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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