United States Cellular Corp USM

U.S. Cellular Earnings: Results Look Same as Usual While Stock Rides on Strategic Alternatives

U.S. Cellular's third-quarter results were consistent with the past several quarters. The firm is making encouraging progress on some smaller lines of business, but those are not enough to move the needle relative to the core mobile phone business, which continues to struggle. We believe U.S. Cellular has valuable assets and is making an admirable effort, but it cannot compete with the national wireless carriers it's up against. U.S. Cellular's standalone value continues to deteriorate, in our view, as its customer base shrinks each quarter. The firm reiterated its exploration of strategic alternatives, and the stock remains elevated on those hopes. We think a sale of the firm would be in the best interest of shareholders, but the potential outcomes and valuation remain highly speculative. We're maintaining our $24 fair value estimate, which is based on the firm's current standalone value.