What Frontier’s Valuation Suggests
As of September 20, 2017, AT&T (T) was the largest US telecom carrier by market capitalization. AT&T has a market capitalization of ~$236.0 billion, followed by Verizon (VZ) at ~$201.8 billion. In the US wireline space, Frontier (FTR) had a market capitalization of ~$0.9 billion. Meanwhile, this metric for Windstream (WIN) and CenturyLink (CTL) was ~$0.4 billion and ~$10.3 billion, respectively.
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In the September 20 trading session, Frontier stock closed at $12.00, which is near its lower Bollinger Band level of $11.98, which suggests that Frontier’s stock is oversold.
Frontier’s forward EV-to-EBITDA valuation
As of September 20, 2017, Frontier stock was trading at a forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of ~5.24x. Meanwhile, Windstream and CenturyLink had forward EV-to-EBITDA multiples of ~5.41x and ~6.05x, respectively.
Short interest ratio
As of September 20, 2017, Frontier’s short interest as a percentage of its float (or short interest ratio) was ~9.1%. Usually, when a stock’s short interest ratio is higher than 40%, it signifies that investors and traders foresee a correction in the stock’s price.