Windstream’s falling stock
Windstream Holdings (WIN) stock fell ~45% in August 2017 to close the month at $2.07. Windstream is now trading 10.7% above its 52-week low of $1.87 and 80% below its 52-week high of $10.45.
Windstream announced its 2Q17 results earlier this month, reporting revenue of $1.5 billion with non-GAAP (generally accepted accounting principles) of -$0.37. Although Windstream’s revenue rose 10% YoY (year-over-year) in 2Q17 and beat the earnings estimate, the stock fell ~40% in the week ended August 4, 2017, as the company announced the immediate elimination of its dividend plan.
Windstream’s CEO (chief executive officer) believes that the firm’s stock is undervalued. Windstream had been a popular dividend stock, with a yield of 14.6% or $0.60 per share. The dividend plan was replaced by a share buyback capital return program of $90 million.
Meanwhile, Uniti Group (UNIT) stock fell over 23% last month. Uniti is a REIT (real estate investment trust) that was spun off from Windstream in 2015 and generates over 70% of its revenue from Windstream’s lease rent payments.
A difficult year for Windstream
Windstream stock has fallen ~70% since the start of calendar 2017 or YTD (year-to-date). The stock fell ~20% in May this year, driven by disappointing 1Q17 results. Its EPS (earnings per share) came in 200% below the analyst estimate of -$0.28. The stock fell ~25% in March 2017 after investors were disappointed with the company’s 4Q16 results.
In 2017, leading investment bank Goldman Sachs (GS) downgraded Windstream stock. Goldman Sachs provided a weak outlook for peers Century Link (CTL) and Frontier Communications (FTR). CTL and FTR stocks have fallen 29% and 80%, respectively, in the trailing-12-month period.