It has been about a month since the last earnings report for Frontier Communications (FTR - Free Report) . Shares have lost about 15.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Frontier Communications due for a breakout? Before we dive into how investors and analysts have reacted as 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.
Frontier Communications Incurs Q3 Loss, Revenues Miss
Frontier Communications reported a narrower-than-expected loss in third-quarter 2018.
Top-Line and Bottom-Line Results
Frontier Communications reported an adjusted loss of 7 cents per share in the third quarter. Notably, the reported figure was narrower than the Zacks Consensus Estimate of a loss of 20 cents. Also, it was narrower than the loss of 94 cents per share incurred in the year-ago quarter.
In the reported quarter, revenues came in at $2,126 million, which lagged the Zacks Consensus Estimate of $2,128 million. Also, the top line was lower than the year-ago tally of $2,251 million.
Revenues in the Customer segment were $2,031 million in the reported quarter, down 1.4% year over year.
Subsidy and other regulatory segments revenues came in at $95 million, down 50.3% year over year.
Costs and Margins
Selling, general and administrative expenses came in at $445 million, down from $487 million recorded a year ago. Total operating expenses came in at $2,159 million, down from $1,929 million. Operating loss was $33 million against an operating income of $322 million in the prior-year quarter.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin expanded 70 basis points in the quarter to 41.3%.
Balance Sheet and Cash Flow
Exiting the third quarter, Frontier Communications had cash and cash equivalents of $238 million, down from $362 million as of Dec 31, 2017. Long-term debt summed $16,402 million, down from $16,970 million recorded at the end of 2017.
For the first nine months of 2018, Frontier Communications generated $1,209 million cash from operating activities, higher than $1,185 million in the year-ago period. Total capital expenditure was $329 million compared with $268 million recorded in the prior-year quarter.
For 2018, Frontier Communications expects operating free cash flow to be around $625 million. Capital expenditures are expected to be in the range of $1,150 -$1,200 million. Cash interest expenses are anticipated to be around $1.5 billion. The company expects to secure adjusted EBITDA of roughly $3.55 billion in 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 57.14% due to these changes.
At this time, Frontier Communications has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 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.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Frontier Communications has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.