Frontier Communications (FTR) Q4 Earnings: What's Up?
We expect Frontier Communications Corporation FTR to beat expectations when it reports fourth-quarter 2015 financial numbers on Feb 23, before market opens.
Last quarter, Frontier Communications had posted a 400.00% positive earnings surprise. Moreover, the company’s earnings have outpaced the Zacks Consensus Estimate in two of the last four quarters, with an average beat of 92.50%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Frontier Communications is likely to beat estimates because it has the perfect combination of two key ingredients.
Zacks ESP: Earnings ESP for Frontier Communications stands at +50.00% because the Most Accurate estimate is a loss of 2 cents while the Zacks Consensus Estimate is pegged at a loss of 4 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive surprise.
Zacks Rank: Frontier Communications currently has a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings estimates. Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.
The combination of Frontier Communications’ Zacks Rank #3 and +50.00% ESP makes us reasonably confident of a beat.
What is Driving the Better-than-Expected Earnings?
Recently, Frontier Communications received the final approval from California Public Utilities Commission (CPUC) for its proposed acquisition of Verizon Communications Inc.’s VZ local wireline operations in California, Florida and Texas. We believe the Verizon deal will drive stronger revenues at Frontier Communications, be accretive to its free cash flow growth and help the company maintain its dividend sustainability as well.
Meanwhile, Frontier Communications’ efforts to lure small and mid-sized Business (SMB) customers through an attractive plan along with enhancement of Ethernet portfolio in order to ramp up services are likely to bolster the company’s performance in the to-be-reported quarter. Moreover, the company is poised to witness strong momentum in broadband subscriber growth on the back of new marketing plans and programs.
Additionally, launch of its own OTT (over-the-top) service ‘Freedom TV’ and Frontier Communications’ collaborations with other companies to offer differentiated products to complement customers’ needs should further boost the quarter’s performance.
However, persistent decline in access lines, high level of debt and regulatory concerns are certain factors that may weigh upon the quarter’s performance.
Other Stocks to Consider
Frontier Communications is not the only company looking up this earnings season. Here are some other companies to consider as our model shows they also have the right combination of elements to post an earnings beat this quarter:
Cogent Communications Holdings, Inc. CCOI has an earnings ESP of +33.33% and a Zacks Rank #3.
Windstream Holdings, Inc. WIN has an earnings ESP of +16.33% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
VERIZON COMM (VZ): Free Stock Analysis Report
WINDSTREAM HLDG (WIN): Free Stock Analysis Report
FRONTIER COMMUN (FTR): Free Stock Analysis Report
COGENT COMM HLD (CCOI): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
