Can Windstream (WIN) Spring A Surprise This Earnings Season?
Zacks Investment Research | Nov 07, 2017 08:56PM ET
Windstream Holdings Inc. (NASDAQ:WIN) is slated to report third-quarter 2017 results on Nov 9, before the opening bell.
The leading local exchange carrier has a negative earnings surprise history. The company’s earnings lagged the Zacks Consensus Estimate in three of the trailing four quarters, with an average miss of 60.3%.
Let’s see how things are shaping up for this announcement.
Factors Likely to Influence This Quarter
We appreciate Windstream’s focus on improving sales, cutting costs and planning pricing initiatives, which are expected to boost profitability and check churn. The company’s cloud-to-cloud disaster recovery management solutions replicate mission-critical virtual servers and data.
Launch of a multi-featured SD-WAN solution looks impressive. The product is expected to aid in optimizing application performance automatically with lesser costs. Windstream’s cloud-to-cloud disaster recovery management solutions, expansion of Kinetic TV services in North Carolina and merger with EarthLink Holdings should rake in considerable profits. Expansion of its metro fibre network business in newer areas and its aim to extend the deployment of G.fast technologies over traditional copper telephone wires bode well.
Acquisition of Broadview Networks Holdings should improve Windstream's balance sheet by reducing leverage through the realization of synergies. This will prove accretive to free cash flow as well.
The company will be promoting its SDN-enabled multi-vendor services in partnership with Ciena Corporation (NYSE:CIEN) , Infinera Corporation (NASDAQ:INFN) and Coriant in the MEF17 Proof of Concept showcase from November 13-16, in Orlando. MEF17 ifocuses on advancing Third-Network connectivity and cloud services for the digital economy & the hyper-connected world.
On the flip side, Windstream has been losing access lines, thanks to pricing pressure and fierce competition. The company is under pressure due to losses in the wholesale business. Being a local exchange carrier, Windstream is exposed to stringent regulatory measures by the Federal Communications Commission as well as state regulations.
Further, continuous investments in technology and network upgrades may dent the company’s earnings. Outdated network equipment has been the primary reason for discontinuation of the DSL (digital subscriber line) service in CLEC (competitive local exchange carrier) territories across 25 states.
Despite management’s efforts to modify financial profile, we are concerned about Windstream’s highly leveraged balance sheet.
In the past three months, shares of Windstream have lost 5.9% compared with the Original post
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