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Why Is Cincinnati Bell (CBB) Down 1.8% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for Cincinnati Bell Inc (CBB - Free Report) . Shares have lost about 1.8% in that time frame.

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 catalysts.

Cincinnati Bell Q2 Earnings Lag Estimates, Sales Beat

Cincinnati Bell’s second-quarter net loss (on a GAAP basis) came in at $0.5 million or a loss of a penny per share compared with a net income of $75 million or $1.78 per share in the year-ago quarter. However, quarterly adjusted (excluding special items) earnings per share were $0.07, which missed the Zacks Consensus Estimate by a penny.

Revenue

Quarterly total revenue of $294 million was down 2% year over year beating the Zacks Consensus Estimate of $290 million.

Operating Metrics

Operating income was $20.9 million compared with $27.4 million in the year-ago quarter. Meanwhile, adjusted EBITDA (earnings before interest, depreciation and amortization) increased 8.2% year over year to $77.2 million in the reported quarter. Adjusted EBITDA margin was 26%, flat year over year.

Cash Flow

In second-quarter 2017, Cincinnati Bell generated $69 million of cash from operating activities compared with $32.2 million in the prior-year quarter. Quarterly free cash flow was $20.8 million compared with a negative $24.6 million in the year-ago quarter.

Liquidity

Cincinnati Bell ended the second quarter of 2017 with cash and cash equivalents of $58.2 million compared with $9.7 million at the end of 2016. Total debt at second quarter-end was $1,126.9 million compared with $1,206.6 million at the end of 2016.

Segmental Results

Entertainment and Communications revenues rose 5% year over year to $201.4 million owing to a 20% rise in consumer video and 40% rise in business video revenues. The increase was partially neutralized by a 33% decline in services & other revenues.

IT Services and Hardware revenues decreased 13% year over year to $96 million. The downside was due to a 35% decline in Management and Monitoring revenues, 20% decline in Professional services revenues, partially mitigated by a 39% rise in unified communications revenues.

Subscribers Statistics

At the end of the second quarter of 2017, Cincinnati Bell had 0.1919 million residential voice lines, down 4.7% year over year and 0.3235 million business voice lines, up 0.3% year over year. Long distance lines were 0.3043 million, down 4.1%. DSL internet subscribers were 0.093 million, down 11.9%. Fioptics internet customers were 0.2141 million, up 8.4%. Fioptics video subscribers were 0.1428 million, up 3.8% year over year.

Outlook

In 2017, Cincinnati Bell expects revenues and adjusted EBITDA of approximately $1.2 billion and $295 million (+/- 2%), respectively.

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. In the past month, the consensus estimate has shifted down by 63.3% due to these changes.

Cincinnati Bell Inc Price and Consensus

 

VGM Scores

At this time, the stock has a strong Growth Score of A, while its Momentum is lagging a lot D. The stock was allocated a grade of B on the value side, putting it in the top 40% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is more suitable for value than growth investors.

Outlook

The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.




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