About a month has gone by since the last earnings report for
Windstream Holdings, Inc. ( WIN - Free Report) . 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. Liquidity
Windstream exited the second quarter of 2017 with $24.7 million of cash and cash equivalents and $5,579.2 million of total debt compared with $59.1 million and $4,863.3 million, respectively, at the end of 2016. At the end of the reported quarter, the debt-to-capitalization ratio was 0.90 compared with 0.97 at the end of 2016.
Segment-Wise Information Consumer & Small Business - ILEC: Total revenue was $387.2 million, down 2% year over year. Of the total, Consumer revenues were $308.8 million, down 0.7%. Small Business – ILEC revenues totaled $78.4 million, down 6.9%. Total profit for the segment was $212.4 million, down 3.7%. Consumer & Small Business – CLEC: Revenues totaled $193.1 million, down 18.4% year over year. Segment profit was $72.1 million, down 23.6%. Wholesale: Revenues came in at $176 million, down 7.9% year over year. Segment profit was $116.4 million, down 7.9%. Enterprise: Total revenue was $574.9 million, down 4.7% year over year. Of the total, Service revenues were $563.9 million, down 4.2%. Product sales were $11 million, down 24.1%. Total profit for the segment was $102.8 million, flat year over year. Subscriber Statistics
As of Jun 30, 2017, the company had 1.3078 million household customers, down 6.8%. High-speed internet customer base was 1.0258 million, down 4.6% while the digital TV customer base was 0.3007 million, down 12.1%. ILEC small business customers totaled 0.1303 million, down 7.6%. Enterprise customers were 0.0346 million, down 4.4% year over year. CLEC consumer customers were 0.6497 million, down 4.9% and CLEC small business customers were 0.0900 million, down 20.5%.
For 2017, Windstream expects total service revenues to be in line with full year 2016. The company projects capital expenditure in the band of $790–$840 million. Adjusted OIBDAR is anticipated at around $2,020 – $2,040 million. Management expects to generate around $200 million of free cash flow in 2017.
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.
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.
Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.