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Here's Why You Should Buy Cincinnati Bell (CBB) Amid Losses
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On Jul 3, telecom service provider Cincinnati Bell Inc. was upgraded by a notch to a Zacks Rank #2 (Buy).
Over the past three months, share price of Cincinnati Bell has gained 12.43%, outperforming the Zacks categorized Diversified Communication Services industry’s 1.27% gain.
Let’s take a closer look at the prospects as well as the impending downturns for the company.
We are impressed with Cincinnati Bell’s efforts to transform itself from a legacy copper-based telecommunications company to an IT firm with contemporary fiber assets. These assets offer flexible data, video, voice and IP solutions to their consumers and business clients.
The company’s Entertainment and Communications business has been performing favorably, which is evident from the increasing Fioptics Internet and video subscribers. As of Mar 31, 2017, Fioptics Internet customers were 0.2073 million, up 26%. Fioptics video subscriber count was 0.1411 million, up 17.6% year over year. The company plans to continue investing in Fioptics networks to enhance customer experience. This move will improve ARPU (average revenue per user) and enable Cincinnati Bell to check churn. In this regard, introduction of MyTV through its Fioptics high-speed Internet service bodes well. We expect to see a similar uptrend in terms of growth and subscriber addition in the Fioptics Internet and video segment in the to-be reported quarter.
Increased investments in strategic products, the creation of a new business division for small and mid-sized businesses and the development of its IT Services and Hardware division should rake in more profits.
Offering of eero Inc’s whole-home Wi-Fi system at its retail stores should help Cincinnati Bell expand its FTTH (fiber to the home) customer base. The company’s decision to expand its call centre base by hiring 300 employees has added to the region’s economic development. Cincinnati Bell’s efforts to boost its unified communications and cloud services by inking different deals look impressive.
Continuous erosion in local access lines, heavy capital expenditure, legal hurdles and a weakening cash and liquidity position are headwinds for Cincinnati Bell. Intense competition in the company’s operational region can be a drag on its pricing power, which might induce downward pressure on its margins in the future.
Cincinnati Bell faced opposition to its Local Area Service (LAS) discontinuation within the Kentucky region, from consumers and industry groups, citing concerns over the shutdown of POTS. CenturyLink Inc. (CTL) and Windstream Holdings, Inc. faced similar issues from consumers and clients regarding their requests to liquidate Frame Relay and small to medium-sized business digital subscriber line services.
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>
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Here's Why You Should Buy Cincinnati Bell (CBB) Amid Losses
On Jul 3, telecom service provider Cincinnati Bell Inc. was upgraded by a notch to a Zacks Rank #2 (Buy).
Over the past three months, share price of Cincinnati Bell has gained 12.43%, outperforming the Zacks categorized Diversified Communication Services industry’s 1.27% gain.
Let’s take a closer look at the prospects as well as the impending downturns for the company.
We are impressed with Cincinnati Bell’s efforts to transform itself from a legacy copper-based telecommunications company to an IT firm with contemporary fiber assets. These assets offer flexible data, video, voice and IP solutions to their consumers and business clients.
The company’s Entertainment and Communications business has been performing favorably, which is evident from the increasing Fioptics Internet and video subscribers. As of Mar 31, 2017, Fioptics Internet customers were 0.2073 million, up 26%. Fioptics video subscriber count was 0.1411 million, up 17.6% year over year. The company plans to continue investing in Fioptics networks to enhance customer experience. This move will improve ARPU (average revenue per user) and enable Cincinnati Bell to check churn. In this regard, introduction of MyTV through its Fioptics high-speed Internet service bodes well. We expect to see a similar uptrend in terms of growth and subscriber addition in the Fioptics Internet and video segment in the to-be reported quarter.
Increased investments in strategic products, the creation of a new business division for small and mid-sized businesses and the development of its IT Services and Hardware division should rake in more profits.
Offering of eero Inc’s whole-home Wi-Fi system at its retail stores should help Cincinnati Bell expand its FTTH (fiber to the home) customer base. The company’s decision to expand its call centre base by hiring 300 employees has added to the region’s economic development. Cincinnati Bell’s efforts to boost its unified communications and cloud services by inking different deals look impressive.
Continuous erosion in local access lines, heavy capital expenditure, legal hurdles and a weakening cash and liquidity position are headwinds for Cincinnati Bell. Intense competition in the company’s operational region can be a drag on its pricing power, which might induce downward pressure on its margins in the future.
Cincinnati Bell faced opposition to its Local Area Service (LAS) discontinuation within the Kentucky region, from consumers and industry groups, citing concerns over the shutdown of POTS. CenturyLink Inc. (CTL) and Windstream Holdings, Inc. faced similar issues from consumers and clients regarding their requests to liquidate Frame Relay and small to medium-sized business digital subscriber line services.
Other Stocks to Consider
Investors interested in the Zacks classified broader Utilities sector may also consider the likes of BCE Inc. (BCE - Free Report) and Chunghwa Telecom Co. Ltd. (CHT - Free Report) . BCE is a Zacks Rank #2 stock, while Chunghwa Telecom sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. See Them Free>>