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How Frontier Communications Investors Lost 35% in March

Anders Bylund, The Motley Fool

What happened

Shares of Frontier Communications (NASDAQ: FTR) plunged 34.8% lower in March of 2019, according to data from S&P Global Market Intelligence. The regional telecommunications company surged 52% higher in February, thanks to a mixed earnings report, but that leap may have been an overreaction. Frontier's stock slid back down in March amid a nearly total radio silence.

Yellow charting arrow crashing downward.

Image source: Getty Images.

So what

The fourth-quarter report that lifted Frontier's shares came at the very end of February, setting the stock up for a difficult March. To be clear, that report wasn't exactly brilliant.

Frontier collected $2.12 billion of top-line revenues versus Wall Street's $2.09 billion consensus estimate, which worked out to a 1.4% outperformance. On the bottom line, adjusted net losses of $0.06 per share were harsher than the expected $0.04 loss per share. The investor confidence that resulted from that business update simply didn't have staying power.

Now what

February's fleeting surge didn't exactly make millionaires out of Frontier's long-term investors. It's a tiny blip on a dramatic downward spiral over the last three years, and dividend-adjusted share prices have now crashed 96% lower over that period:

FTR Total Return Price Chart

FTR Total Return Price data by YCharts.

As a small player in a rapidly changing industry, Frontier is losing phone and cable customers to cellphone providers and cord-cutting, respectively. The stock now trades at a mere 0.16 times book value, indicating that investors think they would reap much more value from this company if it shut down its operations, sold all its assets, and returned that cash to shareholders.

There may be more volatility in Frontier's future, both upward and downward, but the larger trend is most definitely negative.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.