ATN International: A Deep Value Play With a High-Powered Dividend

Key Points

• ATN International may grab investor attention because of its strong dividend yield and value metrics, including the P/S ratio.
• However, this telecom firm faces a profitability battle that it has yet to consistently overcome, making long-term dividend and growth prospects less certain.
• Still, ATN's unique position, which focuses on rural and underdeveloped regions, has been met with success among customers as its subscriber base continues to grow.

ATN International Inc. NASDAQ: ATNI owns and operates communications infrastructure in remote and underserved regions in the western U.S., Alaska, and internationally. The firm operates through a number of subsidiary companies, including Alaska Communications, Choice Wireless, Sacred Wind, and Viya.

Investors know ATN for its history of impressive dividend yields and as a value play. The firm offers a dividend yield of 5.66% as of February 13, 2025, an impressive prospect, alongside annualized three-year dividend growth of more than 12%. While this may entice some investors, it's important to keep an eye out for potential risks this niche telecom company poses for investors as well.

ATN's Dividend and Value Characteristics

ATN has increased its quarterly dividend twice in the last three years; the firm paid 17 cents per share for about five years starting in 2017, then bumped up the payment to 21 cents per share in 2022 and 24 cents per share in 2023. Its most recent dividend payment was made in January 2025.

The company's solid dividend history is noteworthy. However, investors might take caution given that ATN currently has a negative dividend payout ratio, meaning that it is continuing to pay dividends despite having taken losses in some recent quarters. This is generally considered to be an unsustainable model, although ATN's long history of dividend payments has so far been unbroken.

ATN is also increasingly flashing value metrics. Its price-to-sales ratio, for example, is a competitive 0.33, while its price-to-cash flow ratio is 1.61. Like ATN's dividend profile, though, its status as a value pick is complicated by the fact that shares of ATNI have fallen by more than 51% in the year leading to February 14, 2025. The company experienced a 52-week low earlier this year. However, it has more recently been trending upward; the year-to-date performance of ATNI shares as of the date above is 7.0%. By comparison, the S&P 500 has climbed by 4.3% over the same period.

A Closer Look at Performance

As of February 14, 2025, the most recent quarter that ATN has reported is Q3 of 2024. For that period, the company noted a net loss attributable to shareholders of nearly $33 million, wider than losses of $3.6 million in the prior-year period. However, the latest quarter included a one-time $35.3 million non-cash goodwill impairment charge on some of ATN's US Telecom segment assets. This segment also faced the conclusion of two government subsidy programs and an expected reduction in construction revenues, compounding the underwhelming performance.

Despite these headwinds, ATN's fundamental customer demand remains strong. The company's "Glass & Steel" strategy favors faster and more reliable fiber optic infrastructure over wireless, and its "First-to-Fiber" goal drives it to aggressively pursue projects in underserved areas without prior fiber infrastructure. The combination of these two strategies seems to have paid off—ATN reported a 6% year-over-year increase in total high-speed broadband subscribers last quarter, as well as an impressive 20% expansion of broadband homes passed by high-speed data services. At the same time, the company has been able to increase its operational efficiency by reducing capital expenditures to under $86 million for the first nine months of 2024, down from nearly $130 million for the first three quarters of 2023.

Potential for Growth, But Risks Remain

ATNI shares currently have a rating of Strong Buy based on two analyst recommendations, as well as a consensus price target of $31 per share, which is more than 75% above current price levels. However, the most recent of the two analyst ratings—a reiterated Buy rating by BWS Financial—is from back in November 2024, when shares were trading several dollars above their level on February 14, 2025.

ATN may be a case of a company that offers compelling dividend and value prospects on paper—a strong dividend yield and competitive P/S ratio, among other metrics—as well as some potential for growth based on an attractive product offering. However, the challenges to its fundamental operations remain. With a new set of earnings results expected to post on February 19, analysts are predicting another quarter of net losses alongside revenue of more than $179 million. If ATN outperforms—and particularly if it can return to profitability—it may entice more investor interest in this telecom stock.