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Could Frontier Communications Report a Loss in 1Q17?

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Frontier’s earnings in 1Q17

Frontier Communications (FTR) will report its results for 1Q17 on May 2, 2017. In this series, we’ll take a look at expectations for the company’s performance during the quarter. 

Wall Street expects the company’s earnings to fall in 1Q17. Analysts expect Frontier’s adjusted EPS (earnings per share) to reach -$0.05 in 1Q17, compared with -$0.01 in 1Q16.

Earlier in 4Q16, Frontier reported adjusted EPS of -$0.04 and managed to beat Wall Street analysts’ estimate of -$0.05. The disappointing 4Q16 results were primarily driven by a worse-than-expected performance from Verizon’s (VZ) newly acquired CTF (California, Texas, and Florida) wireline assets. Even after the completion of the Verizon purchase, the company faces execution risk due to the size of the acquisition and integration uncertainties. However, Frontier continues to expect operational improvements in the acquired business in the future.

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Frontier’s consensus versus actual earnings

As shown in the above chart, in the last few quarters, Frontier has managed to either meet or beat analysts’ EPS estimates. In 1Q16, Frontier’s earnings were significantly above analysts’ estimates.

In comparison, CenturyLink’s (CTL) adjusted EPS fell ~32.5% YoY (year-over-year) to reach $0.54 in 4Q16. Windstream’s (WIN) EPS fell from $1.41 in 4Q15 to -$0.94 in 4Q16. In the next part, we’ll look at how much revenue growth we can expect from Frontier in 1Q17.

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