Why Windstream Holdings Stock Fell Last Week

Windstream Holdings (WIN) stock fell 43.4% in the week ended August 4, 2017, and closed at $2.23. Windstream announced its 2Q17 results last week and reported revenues of ~$1.5 billion, a rise of 10% YoY (year-over-year) with non-GAAP[1. generally accepted accounting principles] EPS (earnings per share) of -$0.37. In comparison, analysts estimated the company to post revenues of $1.5 billion and EPS of -$0.40 in 2Q17.

However, Windstream stock fell when the company announced that it would be eliminating its dividend plan effective immediately. Windstream replaced its dividend plan with a share buyback authorization of $90 million. According to Windstream’s CEO, Tony Thomas, the company’s stock is undervalued. Windstream is a popular dividend stock and had a dividend yield of 14.6%.

Windstream (WIN) has had a difficult year so far, as its stock price has plummeted 70% in 2017 year-to-date. The stock fell 23% in May after it announced 1Q17 results, and its EPS fell 200% below the analyst estimate of -$0.28. The stock also fell 27% in March 2017 after its disappointing 4Q16 results. 

Earlier this year, investment bank Goldman Sachs (GS) downgraded Windstream stock and provided a weak outlook for telecom companies such as peers CenturyLink (CTL) and Frontier Corp. (FTR).

Windstream stock has fallen over 75% in the last 12 months. Shares of peer telecom companies such as CTL and FTR have declined 25% and 78%, respectively, in the trailing-12-month period.