Dish Network’s Stock Rally May Lose Momentum Soon

Unlike several stocks that jumped sharply in the last couple of weeks on promising vaccine trial results from Pfizer and Moderna, Dish Network’s (NASDAQ:DISH) has been climbing relatively steadily. It gained more than 15% in the last 5 trading days, and more than 30% in Nov 2020 so far. In addition to broad market sentiment, it benefited from its deal with Qualcomm to build a 5G network. So what happens next? Two weeks ago when Dish was trading at $26, we suggested potential for 50% upside. The stock has already achieved 30% upside since then and may well move up more. But what beyond that? Our analysis suggests that considering that Dish Network has already made sizeable gains, further upside is likely to be limited in the coming months. Let’s see why.

Our AI engine analyzes past patterns in stock movements to predict near term behavior for a given level of movement in the recent period, and suggests nearly a 29% probability of Dish Network increasing another 10% over the next 3 months. Compared to this, the chances of a -10% pullback are higher at 41%, suggesting that Dish Network is 1.5x more likely to move down than up for a 10% quantum over the next 3 months. Overall, the suggests nearly a 3.6% return during this period, which is substantially less than last week’s movement. This indicates that Dish’s stock may be running out of steam now. Our detailed dashboard highlights the chances of Dish Network’s stock rising or falling and should help you understand near-term return probabilities for different levels of movements.

Our dashboard Big Movers: DISH Network Moved 17.4% – What Next? lays out the fundamental perspective. While the relative valuation perspective suggests that Dish may have room to grow, the underlying financial trends are not too supportive. A lot might depend on Dish’s 5G play.

Dish Network’s stock price decreased -20.9% this year, from $35.47 to $28.05, before moving 17.4% last week, and ending at $32.94. At the beginning of this year, Dish Network’s trailing 12 month P/S ratio was 1.33. This figure decreased -63.3% to 0.49, before ending at 0.57. So the stock is comparatively quite cheap right now. But what about its peers? Compared to Dish Network’s P/S multiple of 0.57, the figure for its peers Comcast and AT&T stand at 2.19 and 1.19 respectively, suggesting room for Dish to grow.

Let’s look at long-term trends. Dish’s stock has decreased -25.4% between 2017 and 2019, and has decreased -30.7% between 2017 and now. So the last week’s move is at odds with the long-term trend. If we  look at the underlying growth, we find that Dish Network’s revenue decreased -11% from $14,391 Mil in 2017 to $12,808 Mil in 2019. For the last 12 months, this figure stood at $14,177 Mil, implying increase of 10.7% over 2019 numbers. But this revenue boost comes from its acquisition of Boost Mobile. If we look at the profitability, we find that the company’s net margins have decreased -25.1% from 14.6% in 2017 to 10.9% in 2019. For the last 12 months, this figure fell further to 10% despite an increase in revenue. Considering this, we remain cautious about Dish as a strong investment choice until more evidence starts to emerge regarding its wireless play.

It might be worth waiting and watching how Dish Network’s stock moves in the coming months before making an investment decision. Meanwhile check out a high quality portfolio to beat the market, with over 100% return since 2016, versus 55% for the S&P 500. Comprised of companies with strong revenue growth, healthy profits, lots of cash, and low risk, it has outperformed the broader market year after year, consistently.

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