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WideOpenWest (WOW - Free Report) operates as a cable provider primarily in the United States. The company offers high speed data, cable television, and digital telephony services to residential and business customers. WOW’s basic cable services are comprised of local broadcast television and community programming as well as ultra-video products. In addition, WOW! tv+ offers traditional cable video and cloud DVR functionality, voice remote with Google Assistant, and Netflix and Google Play Store integration. WideOpenWest was founded in 2001 and is headquartered in Englewood, CO.
Flying Against the Wind
Formerly known as WideOpenWest Kite, WOW has been fighting an uphill battle. A Zacks #5 Rank (Strong Sell), WOW is a component of the Zacks Cable Television industry group, which currently ranks in the bottom 11% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months. Candidates in the bottom tiers of industry groups can often represent solid potential short candidates.
While individual stocks have the ability to outperform even when included in a poor-performing industry, the inclusion in a weaker group serves as a headwind for any potential rallies. The odds are stacked against WOW and the stock is agreeing with this notion after making a series of lower lows.
WOW is also relatively overvalued relative to its industry group, irrespective of the metric used:
Image Source: Zacks Investment Research
Recent Earnings and Future Estimates
The cable provider reported Q4 results last Thursday of -$0.03/share, a -127.27% surprise compared to the $0.11 consensus. WOW has missed the mark in terms of earnings estimates in each of the past five quarters. The company has posted a trailing four-quarter average earnings miss of -183.9%. As a company, when you’re missing consensus by that amount over time, you’re going to be fighting against the current when it comes to the stock price.
For the current quarter, analysts have decreased their EPS estimate by -15.38% in just the past week. Declining earnings estimates are a big red flag and need to be respected. The Q1 Zacks Consensus Estimate now sits at $0.11, which would exactly match the figure from the same quarter in 2021 – not exactly the type of trend bulls are looking for. Q1 revenues are anticipated to slide -39.3% to $173.78 million, a steep decline from the $286.3 million a year ago.
Technical Outlook
As illustrated below, WOW is in a sustained downtrend. Notice how the stock has plunged below both the 50-day (green line) and 200-day (blue line) moving averages and is making a series of lower lows. It’s also important to point out that both moving averages have rolled over and are sloping downward – a good sign for the bears.
Image Source: StockCharts.com
Unless the stock makes some significant headway in the coming days, it appears likely that WOW will experience the dreaded death cross, wherein the 50-day moving average crosses below the 200-day moving average. With a history of earnings misses and an unpredictable equity market, the odds aren’t exactly in WOW’s favor.
Bottom Line
Our Zacks Style Scores depict a weaking outlook for this stock, as WOW is rated a worst-possible ‘F’ in both our Growth and overall VGM categories. A deteriorating fundamental and technical backdrop show that this stock is fighting an uphill battle. The fact that WOW is included in one of the worst-performing industry groups simply adds another headwind to a long list of concerns.
Potential investors should only think about including this stock in their portfolio as part of a hedge or short strategy. Bulls will want to steer clear of an overvalued WOW until the situation shows major signs of improvement.
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Bear of the Day: WideOpenWest, Inc. (WOW)
WideOpenWest (WOW - Free Report) operates as a cable provider primarily in the United States. The company offers high speed data, cable television, and digital telephony services to residential and business customers. WOW’s basic cable services are comprised of local broadcast television and community programming as well as ultra-video products. In addition, WOW! tv+ offers traditional cable video and cloud DVR functionality, voice remote with Google Assistant, and Netflix and Google Play Store integration. WideOpenWest was founded in 2001 and is headquartered in Englewood, CO.
Flying Against the Wind
Formerly known as WideOpenWest Kite, WOW has been fighting an uphill battle. A Zacks #5 Rank (Strong Sell), WOW is a component of the Zacks Cable Television industry group, which currently ranks in the bottom 11% out of more than 250 Zacks Ranked Industries. As such, we expect this industry group as a whole to underperform the market over the next 3 to 6 months. Candidates in the bottom tiers of industry groups can often represent solid potential short candidates.
While individual stocks have the ability to outperform even when included in a poor-performing industry, the inclusion in a weaker group serves as a headwind for any potential rallies. The odds are stacked against WOW and the stock is agreeing with this notion after making a series of lower lows.
WOW is also relatively overvalued relative to its industry group, irrespective of the metric used:
Image Source: Zacks Investment Research
Recent Earnings and Future Estimates
The cable provider reported Q4 results last Thursday of -$0.03/share, a -127.27% surprise compared to the $0.11 consensus. WOW has missed the mark in terms of earnings estimates in each of the past five quarters. The company has posted a trailing four-quarter average earnings miss of -183.9%. As a company, when you’re missing consensus by that amount over time, you’re going to be fighting against the current when it comes to the stock price.
For the current quarter, analysts have decreased their EPS estimate by -15.38% in just the past week. Declining earnings estimates are a big red flag and need to be respected. The Q1 Zacks Consensus Estimate now sits at $0.11, which would exactly match the figure from the same quarter in 2021 – not exactly the type of trend bulls are looking for. Q1 revenues are anticipated to slide -39.3% to $173.78 million, a steep decline from the $286.3 million a year ago.
Technical Outlook
As illustrated below, WOW is in a sustained downtrend. Notice how the stock has plunged below both the 50-day (green line) and 200-day (blue line) moving averages and is making a series of lower lows. It’s also important to point out that both moving averages have rolled over and are sloping downward – a good sign for the bears.
Image Source: StockCharts.com
Unless the stock makes some significant headway in the coming days, it appears likely that WOW will experience the dreaded death cross, wherein the 50-day moving average crosses below the 200-day moving average. With a history of earnings misses and an unpredictable equity market, the odds aren’t exactly in WOW’s favor.
Bottom Line
Our Zacks Style Scores depict a weaking outlook for this stock, as WOW is rated a worst-possible ‘F’ in both our Growth and overall VGM categories. A deteriorating fundamental and technical backdrop show that this stock is fighting an uphill battle. The fact that WOW is included in one of the worst-performing industry groups simply adds another headwind to a long list of concerns.
Potential investors should only think about including this stock in their portfolio as part of a hedge or short strategy. Bulls will want to steer clear of an overvalued WOW until the situation shows major signs of improvement.