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Trade-Ideas: Frontier Communications Corp Class B (FTR) Is Today's "Water-Logged And Getting Wetter" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Frontier Communications Corp Class B ( FTR) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Frontier Communications Corp Class B as such a stock due to the following factors:

  • FTR has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $38.4 million.
  • FTR has traded 5.5 million shares today.
  • FTR traded in a range 204.4% of the normal price range with a price range of $0.18.
  • FTR traded below its daily resistance level (quality: 72 days, meaning that the stock is crossing a resistance level set by the last 72 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in FTR with the Ticky from Trade-Ideas. See the FREE profile for FTR NOW at Trade-Ideas

More details on FTR:

Frontier Communications Corporation, a communications company, provides regulated and unregulated voice, data, and video services to business, residential, and wholesale customers in the United States. The stock currently has a dividend yield of 9.3%. FTR has a PE ratio of 39.3. Currently there are 5 analysts that rate Frontier Communications Corp Class B a buy, 1 analyst rates it a sell, and 7 rate it a hold.

The average volume for Frontier Communications Corp Class B has been 9.1 million shares per day over the past 30 days. Frontier Communications Corp Class B has a market cap of $4.3 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.85 and a short float of 22.3% with 23.88 days to cover. Shares are up 0.9% year to date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Frontier Communications Corp Class B as a hold. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and weak operating cash flow.

Highlights from the ratings report include:

  • FRONTIER COMMUNICATIONS CORP has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. However, the consensus estimates suggest that there will be an upward trend in the coming year. During the past fiscal year, FRONTIER COMMUNICATIONS CORP's EPS of $0.14 remained unchanged from the prior years' EPS of $0.14. This year, the market expects an improvement in earnings ($0.23 versus $0.14).
  • FTR, with its decline in revenue, slightly underperformed the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 5.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Although FTR's debt-to-equity ratio of 2.07 is very high, it is currently less than that of the industry average. Along with the unfavorable debt-to-equity ratio, FTR maintains a poor quick ratio of 0.91, which illustrates the inability to avoid short-term cash problems.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Telecommunication Services industry. The net income has significantly decreased by 313.8% when compared to the same quarter one year ago, falling from $17.99 million to -$38.46 million.

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