Why Frontier Communications' Shares Jumped
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Frontier Communications (NAS: FTR) rose 11% today after the company reported earnings.
So what: In the second quarter, revenue declined slightly to $1.26 billion and the company's profit was nearly cut in half from $32.3 million to $18.0 million, or $0.08 per share on an adjusted basis. But it's all about expectations, and revenue beat slightly while the profit beat the $0.05 EPS mark analysts expected.
Now what: The company is doing a good job keeping margins up and cash flow high but I have a hard time seeing a great reason to bet on the future of the company. Frontier is working to improve broadband but revenue is still falling and the stock isn't a great value at 20 times forward earnings. I'm going to pass on today's move and see if the company can turn the revenue trend around before betting on the stock.
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The article Why Frontier Communications' Shares Jumped originally appeared on Fool.com.Fool contributorTravis Hoiumdoes not have a position in any company mentioned. You can follow Travis on Twitter at@FlushDrawFool, check out hispersonal stock holdingsor follow his CAPS picks atTMFFlushDraw. The Motley Fool has adisclosure policy. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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