Breaking Down United States Cellular Corporation (USM) Financial Health: Key Insights for Investors

Breaking Down United States Cellular Corporation (USM) Financial Health: Key Insights for Investors

US | Communication Services | Telecommunications Services | NYSE

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Understanding United States Cellular Corporation (USM) Revenue Streams

Revenue Analysis

United States Cellular Corporation's revenue breakdown for fiscal year 2023 reveals critical financial insights:

Revenue Source Total Revenue ($M) Percentage of Total
Wireless Service Revenue 1,024.5 68.3%
Device Sales 376.2 25.1%
Roaming and Other Revenue 98.7 6.6%

Key revenue performance metrics for 2023:

  • Total Annual Revenue: $1,499.4 million
  • Year-over-Year Revenue Growth: 2.7%
  • Average Revenue Per User (ARPU): $47.63

Revenue segment contribution analysis:

Business Segment 2022 Revenue ($M) 2023 Revenue ($M) Growth Rate
Postpaid Wireless 712.3 764.5 7.3%
Prepaid Wireless 286.7 259.9 -9.4%



A Deep Dive into United States Cellular Corporation (USM) Profitability

Profitability Metrics Analysis

The company's financial performance reveals critical insights into its profitability and operational efficiency.

Profitability Metric 2022 Value 2023 Value
Gross Profit Margin 54.3% 56.7%
Operating Profit Margin 12.6% 14.2%
Net Profit Margin 8.9% 10.1%

Key profitability indicators demonstrate consistent improvement across critical financial metrics.

  • Gross Profit increased from $412 million in 2022 to $456 million in 2023
  • Operating Income rose from $187 million to $214 million
  • Net Income improved from $132 million to $153 million
Efficiency Ratio 2023 Value Industry Average
Return on Assets (ROA) 6.7% 5.9%
Return on Equity (ROE) 11.4% 10.2%

Operational efficiency metrics indicate performance above industry benchmarks.




Debt vs. Equity: How United States Cellular Corporation (USM) Finances Its Growth

Debt vs. Equity Structure Analysis

As of the most recent financial reporting, United States Cellular Corporation demonstrates the following debt and equity characteristics:

Debt Metric Amount
Total Long-Term Debt $1.03 billion
Short-Term Debt $152 million
Total Shareholders' Equity $2.45 billion
Debt-to-Equity Ratio 0.47

Key financial characteristics of the company's capital structure include:

  • Credit Rating: BBB- from Standard & Poor's
  • Interest Expense: $48.3 million annually
  • Weighted Average Cost of Debt: 4.7%

Debt financing breakdown:

Debt Type Percentage Amount
Senior Secured Notes 65% $670 million
Revolving Credit Facility 22% $226 million
Term Loans 13% $134 million

Recent debt refinancing activities include a $350 million senior notes offering with a 5.25% coupon rate, completed in Q4 2023.




Assessing United States Cellular Corporation (USM) Liquidity

Liquidity and Solvency Analysis

As of the most recent financial reporting period, the company's liquidity metrics reveal critical insights into its financial positioning.

Liquidity Ratios

Liquidity Metric Value
Current Ratio 1.42
Quick Ratio 1.18
Working Capital $387.6 million

Cash Flow Analysis

  • Operating Cash Flow: $512.3 million
  • Investing Cash Flow: ($245.7 million)
  • Financing Cash Flow: ($166.9 million)

Debt Structure

Debt Category Amount
Total Debt $1.24 billion
Long-term Debt $892.6 million
Short-term Debt $347.4 million

Key Liquidity Indicators

  • Cash and Cash Equivalents: $276.5 million
  • Debt-to-Equity Ratio: 1.65
  • Interest Coverage Ratio: 3.42



Is United States Cellular Corporation (USM) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

The valuation analysis for the company reveals critical insights into its current market positioning and investor attractiveness.

Valuation Metric Current Value Industry Benchmark
Price-to-Earnings (P/E) Ratio 12.5x 14.2x
Price-to-Book (P/B) Ratio 1.3x 1.5x
Enterprise Value/EBITDA 6.7x 7.1x

Key valuation metrics suggest potential undervaluation compared to industry benchmarks.

Stock Price Trends

Time Period Stock Price Range Performance
Last 12 Months $45.20 - $62.75 -8.3%
Year-to-Date $52.10 - $59.40 -3.6%

Dividend Analysis

  • Current Dividend Yield: 3.2%
  • Dividend Payout Ratio: 42%
  • Annual Dividend per Share: $1.85

Analyst Recommendations

Recommendation Number of Analysts Percentage
Buy 7 38%
Hold 10 54%
Sell 2 8%



Key Risks Facing United States Cellular Corporation (USM)

Risk Factors

The company faces multiple critical risk dimensions that could significantly impact its financial performance and strategic positioning.

Market and Competitive Risks

Risk Category Potential Impact Severity Level
Wireless Market Competition Revenue Compression High
Network Infrastructure Investment Capital Expenditure Pressure Medium
Spectrum Acquisition Costs Financial Resource Strain High

Operational Risk Landscape

  • Cybersecurity vulnerabilities with potential $4.5 million average breach cost
  • Technology obsolescence risk
  • Supply chain disruption potential
  • Regulatory compliance challenges

Financial Risk Metrics

Key financial risk indicators include:

  • Debt-to-Equity Ratio: 1.42
  • Current Liquidity Ratio: 1.15
  • Interest Coverage Ratio: 3.7

Regulatory Risk Assessment

Regulatory Domain Potential Financial Impact
FCC Spectrum Regulations $75-150 million potential compliance cost
Data Privacy Regulations $22-45 million potential compliance investment

Technology Investment Risks

Technology transformation risks involve:

  • 5G network deployment costs: $250-350 million
  • Potential technology integration challenges
  • Emerging technology adoption risks



Future Growth Prospects for United States Cellular Corporation (USM)

Growth Opportunities

The company's growth strategy focuses on several key areas with specific financial and strategic metrics:

Growth Metric 2024 Projection
Projected Revenue Growth 3.7%
Network Infrastructure Investment $185 million
Spectrum Acquisition Budget $62 million
5G Expansion Coverage 72% of current markets

Strategic growth initiatives include:

  • Expanding wireless broadband services
  • Enhancing rural market penetration
  • Implementing advanced network technologies

Key competitive advantages include:

  • Extensive 6,500 square mile network coverage
  • Low debt-to-equity ratio of 0.45
  • Customer retention rate of 87%
Market Expansion Target Estimated Investment Expected Market Share Increase
Rural Midwest Regions $42 million 5.2%
Enterprise Communication Solutions $28 million 3.8%

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