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Barbarian At The Gate: Windstream Holdings (WIN)

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 Windstream Holdings ( WIN) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Windstream Holdings as such a stock due to the following factors:

  • WIN has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $59.7 million.
  • WIN has traded 12.1 million shares today.
  • WIN traded in a range 262.3% of the normal price range with a price range of $0.38.
  • WIN traded above its daily resistance level (quality: 21 days, meaning that the stock is crossing a resistance level set by the last 21 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' 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 positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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

More details on WIN:

Windstream Holdings, Inc. provides communications and technology solutions in the United States. The company offers managed services and cloud computing services to businesses, as well as broadband, voice, and video services to consumers primarily in rural markets. The stock currently has a dividend yield of 13.6%. WIN has a PE ratio of 35.1. Currently there are 2 analysts that rate Windstream Holdings a buy, 4 analysts rate it a sell, and 7 rate it a hold.

The average volume for Windstream Holdings has been 6.5 million shares per day over the past 30 days. Windstream has a market cap of $4.4 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.92 and a short float of 14.6% with 11.29 days to cover. Shares are down 6.6% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Windstream Holdings as a hold. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, unimpressive growth in net income and generally higher debt management risk.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $448.10 million or 10.15% when compared to the same quarter last year. In addition, WINDSTREAM HOLDINGS INC has also modestly surpassed the industry average cash flow growth rate of 4.69%.
  • The gross profit margin for WINDSTREAM HOLDINGS INC is rather high; currently it is at 53.62%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, WIN's net profit margin of 2.03% significantly trails the industry average.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, WINDSTREAM HOLDINGS INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The debt-to-equity ratio is very high at 10.35 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. To add to this, WIN has a quick ratio of 0.50, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • The share price of WINDSTREAM HOLDINGS INC has not done very well: it is down 24.63% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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