How Much Revenue Growth Can We Expect from Windstream?



Windstream’s revenue

Wall Street expects Windstream Holdings’ (WIN) revenue to keep shrinking in the next two quarters. As per Wall Street analyst consensus, Windstream’s revenue is expected to decline by ~3.5% and ~8.6% in 2Q16 and 3Q16, respectively, on a year-over-year (or YoY) basis. Earlier in 1Q16, Windstream’s revenue fell ~3.2% YoY to reach ~$1.4 billion. In terms of pro forma results, the company’s revenue declined ~0.5% YoY during the quarter.

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The telecom company’s revenue was in line with Wall Street’s consensus expectation earlier in 1Q16. During 4Q15 and 1Q15, Windstream’s revenue figures were lower than Wall Street expected. However, in 3Q15 and 2Q15, the wireline telecom company had positively surprised Wall Street’s analysts in the revenue metric.

Windstream’s revenue by segment in 1Q16

Now let’s look at the key components impacting Windstream’s revenue. The declining trend in Windstream’s revenues from consumer and small business ILEC (incumbent local exchange carrier), carrier, and small business CLEC (competitive local exchange carrier) components continued in 1Q16.

During the quarter, Windstream’s consumer and small business ILEC revenue decreased by ~1.4% YoY to ~$0.4 billion. Meanwhile, carrier service revenue fell ~7.4% YoY to reach ~$0.16 billion for the quarter. Additionally, Windstream’s small business CLEC service revenue declined ~12.2% YoY to reach ~$0.13 billion in 1Q16.

On the positive side, the telecom player’s enterprise revenue continued to grow in 1Q16. This revenue stream increased by ~1.9% YoY to reach ~$0.51 billion during the quarter.

For diversified exposure to Windstream, you can consider investing in the iShares U.S. Telecommunications ETF (IYZ). The ETF held ~2.9% of its holdings in the telecom company at the end of April 2016.

Note that the ETF also held a total of ~36.7% in AT&T (T), Verizon (VZ), Level 3 Communications (LVLT), CenturyLink (CTL), and Frontier Communications (FTR) on the same date.


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