Why Frontier Communications (FTR) Stock is Rising Today
NEW YORK (TheStreet) -- Frontier Communications Corp. (FTR) - Get Report stock is gaining 3.76% to $4.82 in afternoon trading on Monday after a California judge suggested the approval of the company's acquisition of some Verizon Communications (VZ) network assets in the state.
Administrative Law Judge Karl Bemesderfer of the California Public Utilities Commission issued a favorable proposed decision for the transaction, which will be voted on by the full commission by the end of the year.
The support of the California Public Utilities Commission would be the last regulatory approval need to complete the transaction.
In February, Frontier agreed to acquire Verizon's wireline, broadband and video operations in California, Florida and Texas for $10.54 billion in cash.
The transaction is scheduled to close in the first quarter of 2016 and has been approved by the Federal Communications Commission, the Justice Department, and the Public Utility Commission of Texas
Separately, TheStreet Ratings team rates FRONTIER COMMUNICATIONS CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
We rate FRONTIER COMMUNICATIONS CORP (FTR) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and generally higher debt management risk.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 24.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Net operating cash flow has increased to $345.00 million or 14.63% when compared to the same quarter last year. In addition, FRONTIER COMMUNICATIONS CORP has also modestly surpassed the industry average cash flow growth rate of 7.84%.
- 41.43% is the gross profit margin for FRONTIER COMMUNICATIONS CORP which we consider to be strong. Regardless of FTR's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, FTR's net profit margin of -0.98% significantly underperformed when compared to the industry average.
- 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 133.3% when compared to the same quarter one year ago, falling from $41.99 million to -$14.00 million.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, FRONTIER COMMUNICATIONS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FTR
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.