We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bear of the Day: Frontier Communications Corp (FTR)
Read MoreHide Full Article
Management teams take the brunt of negative press when things are not going too well even if they are doing to correct things. At times, fixing big issues takes a bit longer than anticipated. This is the case facing our Zacks Bear of the Day, Frontier Communications . Management is currently in the process of fixing acquired accounts, but it is taking a longer than expected, which in turn is hurting overall revenues.
This Zacks Ranked #5 (Strong Sell) operates as a communications company providing services primarily to rural areas and small and medium-sized towns and cities in the United States. The Company offers a variety of voice, data, Internet, and television services and products. It also provides local and long distance voice services, enhanced services, long distance network services and packages of communications services. Frontier Communications Corporation is based in Stamford, Connecticut.
Recent Earnings Results
On February 27th, FTR reported Q4 16 earnings results; they missed both the Zacks consensus earnings and revenue estimates. The company saw sequential declines in total revenues -4.6%, CTF operations revenues -6.9%, Frontier legacy revenues -2.4%, total residential customers -2.9%, average monthly residential revenue per customer -2.4%, total business customers -2.7%, average monthly business revenue per customer -0.5%, broadband subscribers -2.1%, and video subscribers -5.6%.
Management’s Take
According to Dan McCarthy, President and CEO, “Results for the fourth quarter were impacted by our intensified efforts to resolve acquired accounts in California, Texas and Florida that we have determined to be non-paying. This process is almost complete, and we expect to return to a normalized trend by the start of the second quarter. I am pleased that underlying CTF customer trends improved in Q4 and continue to improve in Q1.”
Mr. McCarthy continued, “We are taking action to adapt our organization to the opportunities created by the increased scale and scope we recently acquired, to invest wisely in the business, and to improve our financial flexibility. We remain committed to delivering shareholder value going forward, by improving revenue trends and managing expenses to provide healthy free cash flow and maintain our quarterly common dividend through a sustainable payout ratio.”
Price and Earnings Consensus Graph
As you can see in the price and earnings consensus graph below, FTR has been trending downwards for most of 2016, and into 2017. Further, earnings estimates (Brown line) are trending in the wrong direction as well.
Frontier Communications Corporation Price and Consensus
Due to the earnings and revenue miss coupled with continued concerns regarding the account clean-up contributing to revenue declines earnings estimates for Q1 17, Q2 17, FY 17 and FY 18 have all seen negative estimate revisions over the past seven days; Q1 17 fell from -$0.02 to -$0.04, Q2 17 dropped from -$0.03 to -$0.05, FY 17 declined from -$0.09 to -$0.15, and FY 18 slipped from $0.04 to -$0.03.
Bottom Line
The account clean-up issues are taking a bit longer than expected. This delay is having a negative impact on both the top and bottom lines. While management is focused on fixing these issues as soon as possible, it appears as though investors will have to wait to the second quarter 2017 before they are resolved.
The Wireline/Regional/Rural industry segment currently does not have any company with a Zacks rating above #4 (Sell). Therefore it would be best to wait on the sidelines till the second quarter 2017 to see of FTR has resolved their account clean-up issues.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>
Due to inactivity, you will be signed out in approximately:
Image: Bigstock
Bear of the Day: Frontier Communications Corp (FTR)
Management teams take the brunt of negative press when things are not going too well even if they are doing to correct things. At times, fixing big issues takes a bit longer than anticipated. This is the case facing our Zacks Bear of the Day, Frontier Communications . Management is currently in the process of fixing acquired accounts, but it is taking a longer than expected, which in turn is hurting overall revenues.
This Zacks Ranked #5 (Strong Sell) operates as a communications company providing services primarily to rural areas and small and medium-sized towns and cities in the United States. The Company offers a variety of voice, data, Internet, and television services and products. It also provides local and long distance voice services, enhanced services, long distance network services and packages of communications services. Frontier Communications Corporation is based in Stamford, Connecticut.
Recent Earnings Results
On February 27th, FTR reported Q4 16 earnings results; they missed both the Zacks consensus earnings and revenue estimates. The company saw sequential declines in total revenues -4.6%, CTF operations revenues -6.9%, Frontier legacy revenues -2.4%, total residential customers -2.9%, average monthly residential revenue per customer -2.4%, total business customers -2.7%, average monthly business revenue per customer -0.5%, broadband subscribers -2.1%, and video subscribers -5.6%.
Management’s Take
According to Dan McCarthy, President and CEO, “Results for the fourth quarter were impacted by our intensified efforts to resolve acquired accounts in California, Texas and Florida that we have determined to be non-paying. This process is almost complete, and we expect to return to a normalized trend by the start of the second quarter. I am pleased that underlying CTF customer trends improved in Q4 and continue to improve in Q1.”
Mr. McCarthy continued, “We are taking action to adapt our organization to the opportunities created by the increased scale and scope we recently acquired, to invest wisely in the business, and to improve our financial flexibility. We remain committed to delivering shareholder value going forward, by improving revenue trends and managing expenses to provide healthy free cash flow and maintain our quarterly common dividend through a sustainable payout ratio.”
Price and Earnings Consensus Graph
As you can see in the price and earnings consensus graph below, FTR has been trending downwards for most of 2016, and into 2017. Further, earnings estimates (Brown line) are trending in the wrong direction as well.
Frontier Communications Corporation Price and Consensus
Frontier Communications Corporation Price and Consensus | Frontier Communications Corporation Quote
Declining Earnings Estimates
Due to the earnings and revenue miss coupled with continued concerns regarding the account clean-up contributing to revenue declines earnings estimates for Q1 17, Q2 17, FY 17 and FY 18 have all seen negative estimate revisions over the past seven days; Q1 17 fell from -$0.02 to -$0.04, Q2 17 dropped from -$0.03 to -$0.05, FY 17 declined from -$0.09 to -$0.15, and FY 18 slipped from $0.04 to -$0.03.
Bottom Line
The account clean-up issues are taking a bit longer than expected. This delay is having a negative impact on both the top and bottom lines. While management is focused on fixing these issues as soon as possible, it appears as though investors will have to wait to the second quarter 2017 before they are resolved.
The Wireline/Regional/Rural industry segment currently does not have any company with a Zacks rating above #4 (Sell). Therefore it would be best to wait on the sidelines till the second quarter 2017 to see of FTR has resolved their account clean-up issues.
8 Stocks with Huge Profit Potential
Just released: Driverless Cars: Your Roadmap to Mega-Profits Today. In this latest Special Report, Zacks’ Aggressive Growth Strategist Brian Bolan explores a full-blown technological breakthrough in the making – autonomous cars. He also spotlights 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>