Why Frontier Communications Stock Jumped Wednesday


By Daniel Sparks, MotleyFool

What happened

Shares of regional telecom company Frontier Communications (NASDAQ:FTR) jumped on Wednesday, rising as much as 39.4%. By the market close, however, the stock was up 17.9%.

The stock's gain follows Frontier's fourth-quarter results, which included better-than-expected revenue.

A chart showing a stock price moving higher


So what

Frontier Communications reported fourth-quarter revenue of $2.12 billion, in line with its revenue in Q3 but down from $2.22 billion in the year-ago quarter. Frontier's fourth-quarter revenue came in ahead of a consensus analyst estimate for revenue of $2.09 billion.

The stabilization of the company's revenue on a sequential basis was probably encouraging for investors given the company's trend of declining revenue over the past several years. This stabilization "was driven by an increase in consumer revenue and a decline in commercial," said Frontier Communications CEO Daniel McCarthy on the company's earnings call. "Consumer churn improved sequentially, as well as relative to the fourth quarter last year." McCarthy also noted that the company's average revenue per customer in its consumer segment improved sequentially.

Frontier's adjusted loss per share was $0.06, worse than a consensus analyst estimate for a loss per share of $0.04. The company's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) notably improved sequentially, rising from $878 million in Q3 to $895 million in Q4.

Now what

The company plans to continue to scale solutions developed through its multiyear transformation plan, which management believes will eventually provide a benefit of $500 million to EBITDA.

Looking ahead, Frontier guided for full-year 2019 adjusted EBITDA between $3.45 billion and $3.55 billion, down from $3.57 billion in 2018.

Newly updated! 10 stocks we like better than Frontier CommunicationsWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

On January 10, David and Tom revealed what they believe are the ten best stocks for investors to buy right now… and Frontier Communications wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Recent Deals

Interested in advertising your deals? Contact Edwin Warfield.