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Frontier Communications (FTR) Q4 Earnings: What's in Store?

Zacks Equity Research

Frontier Communications Corporation FTR, a leading regional telecommunication company in the U.S., is scheduled to report fourth-quarter 2016 results on Feb 27, after the market closes.

Over the past three months, shares of Frontier Communications lost 7.46% compared with the Zacks categorized Wireline - Regional - Rural industry’s loss of 5.77%.

Last quarter, the company’s earnings came in line with the Zacks Consensus Estimate. Moreover, earnings surpassed the Zacks Consensus Estimate in three of the past four quarters, with an average beat of 109.45%.

Let’s see how things are shaping up for this announcement.

Factors at Play

Frontier Communications has been facing numerous issues such as outages, poor telephone services and billing problems. The company continues to suffer from the loss of legacy fixed telephony business to wireless and decline in access lines and wireless backhaul revenues due to customer migration to Ethernet solutions at lower price points.

However, we are impressed with Frontier Communications’ focus to rake in more profits through customer retention, market share gain, product introductions, broadband expansion, and improved sales and marketing initiatives. The company has been trying to derive benefits from the growing Business Service Segment. By foraying into North Carolina through the rollout of ‘Vantage TV’ IPTV and broadband services, Frontier Communications poses threat to major incumbents like AT&T Inc. T and Charter Communications.

Meanwhile, the company’s decision to reward its stockholders with a quarterly cash dividend of $0.105 per share of common stock, payable on Mar 31, 2017, to holders of record at the close of business on Mar 15, looks encouraging.

Earnings Whispers

Our proven model does not conclusively show a beat for Frontier Communications this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.

Zacks ESP: Frontier Communications has an earnings ESP of -33.33%. This is because the Most Accurate estimate is pegged at a loss of 4 cents, while the Zacks Consensus Estimate is pegged at a loss of 3 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Frontier Communications has a Zacks Rank #5 (Strong Sell). 

Please note that we caution against stocks with a Zacks Rank #4 (Sell) or 5 going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Frontier Communications Corporation Price and EPS Surprise

 

Frontier Communications Corporation Price and EPS Surprise | Frontier Communications Corporation Quote

Stocks to Consider

Here are some companies in the Zacks categorized broader ‘Utilities’ sector that have the right combination of elements to post an earnings beat this quarter.

Pinnacle West Capital Corp. PNW is expected to release fourth-quarter 2016 results on Feb 24. The company has an Earnings ESP of +2.04% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. However, Pinnacle West Capital’s earnings lagged the Zacks Consensus Estimate in three of the previous four quarters, with an average miss of 9.99%.

Spark Energy, Inc. SPKE is likely to release fourth-quarter 2016 results around Mar 9. The company has an Earnings ESP of +14.43% and a Zacks Rank #1. However, the company’s earnings lagged the Zacks Consensus Estimate in two of the previous four quarters, with an average miss of 41.21%.

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Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report
 
AT&T Inc. (T): Free Stock Analysis Report
 
Frontier Communications Corporation (FTR): Free Stock Analysis Report
 
Spark Energy, Inc. (SPKE): Free Stock Analysis Report
 
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