U.S. markets closed
  • S&P 500

    4,185.47
    +15.05 (+0.36%)
     
  • Dow 30

    34,200.67
    +164.68 (+0.48%)
     
  • Nasdaq

    14,052.34
    +13.58 (+0.10%)
     
  • Russell 2000

    2,262.67
    +5.60 (+0.25%)
     
  • Crude Oil

    63.07
    -0.39 (-0.61%)
     
  • Gold

    1,777.30
    +10.50 (+0.59%)
     
  • Silver

    26.04
    +0.08 (+0.29%)
     
  • EUR/USD

    1.1980
    +0.0004 (+0.04%)
     
  • 10-Yr Bond

    1.5730
    +0.0430 (+2.81%)
     
  • GBP/USD

    1.3840
    +0.0056 (+0.41%)
     
  • USD/JPY

    108.7830
    +0.0670 (+0.06%)
     
  • BTC-USD

    57,670.47
    -4,456.05 (-7.17%)
     
  • CMC Crypto 200

    1,398.97
    +7.26 (+0.52%)
     
  • FTSE 100

    7,019.53
    +36.03 (+0.52%)
     
  • Nikkei 225

    29,683.37
    +40.68 (+0.14%)
     

Cincinnati Bell (CBB) Up 0.1% Since Last Earnings Report: Can It Continue?

  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.

A month has gone by since the last earnings report for Cincinnati Bell (CBB). Shares have added about 0.1% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Cincinnati Bell due for a pullback? 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 drivers.

Cincinnati Bell Reports Narrower Q3 Loss, Revenues Rise Y/Y

Cincinnati Bell reported decent third-quarter 2020 results wherein the top line improved year over year. Further, the company’s bottom line beat estimates with narrower-than-expected loss.

Net Loss

On a GAAP basis, net loss for the September quarter was $10.8 million or loss of 21 cents per share compared with net loss of $16.2 million or loss of 32 cents per share in the year-ago quarter. This year-over-year improvement was primarily driven by higher revenues in the reported quarter.

Non-GAAP net loss was $8 million or loss of 16 cents per share compared with net loss of $15.4 million or loss of 31 cents per share in the prior-year quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 25 cents.

Revenues

Quarterly revenues inched up 1.8% year over year to $389.5 million, primarily driven by a solid traction in IT Services and Hardware segment along with robust demand for fiber despite macroeconomic issues stemming from the coronavirus pandemic.

Segment Results

Revenues from Entertainment and Communications declined 3% year over year to $241 million with Cincinnati contributing $166.8 million and Hawaii $74.2 million to the total top line. Customer attrition from lower margin linear video programming to over-the-top solutions and weak legacy revenues softened revenues in both the markets. Adjusted EBITDA was $88.8 million, down 4.3% from the year-ago quarter.

IT Services and Hardware revenues were $155.2 million compared with $140.5 million in the year-ago quarter. Adjusted EBITDA was $15.6 million in the third quarter, up 26.8% year over year.

Other Details

Overall operating income was $24.7 million compared with $22.8 million in the year-ago quarter owing to lower operating expenses. Adjusted EBITDA slipped 0.1% to $101.7 million.

Cash Flow & Liquidity

Cincinnati Bell generated $138.9 million of cash from operating activities for the first nine months of 2020 compared with $188.9 million in the prior-year period. As of Sep 30, 2020, the regional telephone company’s non-GAAP net debt totaled $1,949.2 million with cash and cash equivalents of $8.8 million.

Moving Forward

Despite COVID-19-induced crisis, Cincinnati Bell is focused on transforming itself from a legacy copper-based telecommunications company to a technology entity with contemporary fiber assets servicing both consumer and business customers with flexible data, video, voice and IP solutions. Equipped with a well-designed marketing program, popular brand value and strong reputation for offering high-quality service, the company expects to increase its Entertainment and Communications revenues. Also, the expansion of its geographic footprint in IT services brought enhanced scale and client diversification, supporting its shift to a hybrid IT solutions provider.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Cincinnati Bell has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Cincinnati Bell has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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
 
Cincinnati Bell Inc (CBB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research