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Why Intelsat Stock Soared 33% Today

By Rich Smith - May 1, 2018 at 4:50PM

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Investors shrug off losses in hopes that cash will resume flowing soon.

What happened

Intelsat (INTE.Q) stock closed 33.4% higher on Tuesday -- after being up as much as 41.9% at one point during the day -- after the satellite operator reported fiscal Q1 2018 earnings.

Er, make that Q1 2018 losses. Intelsat lost $0.56 per share in Q1 -- much worse than the $0.41-per-share loss that Wall Street had expected. First-quarter sales of $543.8 million exceeded analyst expectations for $520.5 million in revenue. However, this "sales beat" appears to owe to an accounting change that added $25.1 million in sales  from a "significant financing component."

Satellite transmitting to Earth

Intelsat beamed down a loss today -- but guidance remains intact. Image source: Getty Images.

So what

Regardless of how it came about, the larger sales number put Intelsat in positive territory for sales growth, with its revenue rising 1% in comparison to last year's Q1. The quarterly loss, on the other hand, was nearly twice as bad as last year, when Intelsat lost "only" $0.29 in Q1.

On the plus side, Intelsat did generate positive free cash flow last quarter. This was despite the fact that operating cash flow was nearly halved to $80.8 million. Capital spending fell by more than half, to just $68 million, leaving Intelsat with a $12.8 million cash profit for the quarter.

Now what

Looking forward, Intelsat reaffirmed previous guidance, saying investors can expect it to produce between $2.06 billion and $2.11 billion in sales for full-year fiscal 2018, in line with Wall Street's predicted $2.08 billion. Intelsat also reaffirmed its capital spending plans for the next three years:

  • 2018: $375 million to $425 million
  • 2019: $425 million to $500 million
  • 2020: $375 million to $475 million

If these numbers hold true, Intelsat appears to be on track to grow its free cash flow strongly, despite the quarterly loss.

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