Back to top

Image: Bigstock

Why Is Windstream (WIN) Down 13% Since the Last Earnings Report?

Read MoreHide Full Article

About a month has gone by since the last earnings report for Windstream Holdings, Inc. . Shares have lost about 13% 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 of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Windstream Q2 Loss Narrower than Expected, Sales Lag

Windstream’s second-quarter 2017 net loss (on a GAAP basis) was $68.1 million or a loss of $0.37 per share compared with a net income of $1.5 million or $0.01 per share in the year-ago quarter. Windstream’s quarterly loss per share of $0.37 was narrower than the Zacks Consensus Estimate of a loss of $0.45.

Revenue

Total revenue increased 10% year over year to $1,491.6 million in the reported quarter, missing the Zacks Consensus Estimate of $1,499 million. Service revenues increased 10% to $1,465.6 million while Product revenues declined 8% to $26 million.

Operating Metrics

In the reported quarter, total operating expense was $1,384.8 million, up 15% year over year. Operating income was $106.8 million compared with $154.6 million in the prior-year quarter. Adjusted OIBDA (operating income before depreciation and amortization) was $336.9 million, down a substantial 38.3% year over year although it improved sequentially by $1.6 million.

Cash Flow

In the second quarter of 2017, Windstream generated $221.2 million of cash from operations compared with $297.3 million in the prior-year quarter. Adjusted free cash flow was a negative $23.3 million in the reported quarter.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. There have been two revisions higher for the current quarter compared to two lower.

VGM Scores

At this time, Windstream's stock has an average Growth Score of C, though it is lagging a bit on the momentum front with a D. However, the stock was allocated 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.

Our style scores indicate that the stock is more suitable for value investors than growth investors.

Outlook

Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.

Published in