A month has gone by since the last earnings report for Windstream Holdings, Inc. . Shares have lost about 28.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Windstream Q4 Loss Wider than Estimated
On a GAAP basis, the company reported net loss of $86.9 million or a loss of $0.94 per share as against a net income of $140.5 million or $1.41 in the year-ago quarter. On an adjusted basis, the company’s quarterly loss per share of $0.51 was wider than the Zacks Consensus Estimate of a loss of $0.47.
Total revenue declined 8% year over year to $1,309.1 million in the fourth quarter, missing the Zacks Consensus Estimate of $1,337.8 million. Service revenues declined 7% year over year to $1,289.1 million and Product revenues plunged 48% to $20 million.
In the reported quarter, total operating expenses were $1,235.4 million, down 5% year over year. Operating income was $73.7 million, compared with $131.7 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $318.1 million, down 7% year over year.
Cash Flow
In the fourth quarter of 2016, Windstream generated $302.3 million of cash from operations compared with $270.3 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $23.1 million, as against a negative $19.4 million in the year-ago quarter.
Liquidity
Windstream exited 2016 with $59.1 million of cash and cash equivalents and $4,863.6 million of total debt compared with $31.3 million and $5,170.5 million, respectively, at the end of 2015. At the end of 2016, the debt-to-capitalization ratio was 0.97 compared with 0.94 at the end of 2015.
Subscriber Statistics
In the reported quarter, Windstream lost 11,900 high-speed Internet customers, down 18% year over year, and 23,900 household subscribers, down 5% year over year. Moreover, at the end of 2016, the company had 1,354,600 Household customers, down 6% year over year. High-speed Internet customer base was 1,051,100, down 4% year over year and digital TV customer base was 321,000, down 11% year over year.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $391.7 million, down 2% year over year. Of the total, Consumer revenues were $309.7 million, down 1%. Small Business – ILEC revenues totaled $82 million, down 5%. Total profit at the segment was $233.4 million, up 2%.
Small Business - CLEC: Revenues totaled $111.1 million, down 16% year over year. Segment profit was $35.3 million, down 15%.
Wholesale:Revenues came in at $152.7 million, down 11% year over year. Segment profit was $108.9 million, down 12%.
Enterprise:Total revenue was $497.6 million, down 6% year over year. Of the total, Service revenues were $486.3 million, down 2%. Product sales were $11.3 million, down a significant 62%. Total profit for the segment was $85.3 million, up 10%.
Outlook
For 2017, Windstream expects total service revenues to be in line with full-year 2016 level. The company projects capital expenditure in the band of $790–$840 million. Adjusted OIBDAR is anticipated at around $2,000–$2,060 million. Management expects to generate around $200 million of free cash flow in 2017.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
Currently, Windstream's stock has a subpar Growth Score of 'D', however its Momentum is doing a lot better with an 'A'. Following the exact same course, the stock was allocated also a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Windstream (WIN) Down 28.2% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Windstream Holdings, Inc. . Shares have lost about 28.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Windstream Q4 Loss Wider than Estimated
On a GAAP basis, the company reported net loss of $86.9 million or a loss of $0.94 per share as against a net income of $140.5 million or $1.41 in the year-ago quarter. On an adjusted basis, the company’s quarterly loss per share of $0.51 was wider than the Zacks Consensus Estimate of a loss of $0.47.
Total revenue declined 8% year over year to $1,309.1 million in the fourth quarter, missing the Zacks Consensus Estimate of $1,337.8 million. Service revenues declined 7% year over year to $1,289.1 million and Product revenues plunged 48% to $20 million.
In the reported quarter, total operating expenses were $1,235.4 million, down 5% year over year. Operating income was $73.7 million, compared with $131.7 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $318.1 million, down 7% year over year.
Cash Flow
In the fourth quarter of 2016, Windstream generated $302.3 million of cash from operations compared with $270.3 million in the prior-year quarter. In the reported quarter, adjusted free cash flow was $23.1 million, as against a negative $19.4 million in the year-ago quarter.
Liquidity
Windstream exited 2016 with $59.1 million of cash and cash equivalents and $4,863.6 million of total debt compared with $31.3 million and $5,170.5 million, respectively, at the end of 2015. At the end of 2016, the debt-to-capitalization ratio was 0.97 compared with 0.94 at the end of 2015.
Subscriber Statistics
In the reported quarter, Windstream lost 11,900 high-speed Internet customers, down 18% year over year, and 23,900 household subscribers, down 5% year over year. Moreover, at the end of 2016, the company had 1,354,600 Household customers, down 6% year over year. High-speed Internet customer base was 1,051,100, down 4% year over year and digital TV customer base was 321,000, down 11% year over year.
Segment-Wise Information
Consumer & Small Business - ILEC: Total revenue was $391.7 million, down 2% year over year. Of the total, Consumer revenues were $309.7 million, down 1%. Small Business – ILEC revenues totaled $82 million, down 5%. Total profit at the segment was $233.4 million, up 2%.
Small Business - CLEC: Revenues totaled $111.1 million, down 16% year over year. Segment profit was $35.3 million, down 15%.
Wholesale:Revenues came in at $152.7 million, down 11% year over year. Segment profit was $108.9 million, down 12%.
Enterprise:Total revenue was $497.6 million, down 6% year over year. Of the total, Service revenues were $486.3 million, down 2%. Product sales were $11.3 million, down a significant 62%. Total profit for the segment was $85.3 million, up 10%.
Outlook
For 2017, Windstream expects total service revenues to be in line with full-year 2016 level. The company projects capital expenditure in the band of $790–$840 million. Adjusted OIBDAR is anticipated at around $2,000–$2,060 million. Management expects to generate around $200 million of free cash flow in 2017.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
Windstream Holdings, Inc. Price and Consensus
Windstream Holdings, Inc. Price and Consensus | Windstream Holdings, Inc. Quote
VGM Scores
Currently, Windstream's stock has a subpar Growth Score of 'D', however its Momentum is doing a lot better with an 'A'. Following the exact same course, the stock was allocated also a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.