Why Windstream (WIN) Stock Is Down Today

NEW YORK (TheStreet) -- Windstream  (WIN) dipped Thursday after the voice and data network communications provider reported first-quarter earnings that came up short of analysts' expectations.

The company reported earnings of 4 cents a share, which missed the Capital IQ Consensus Estimate of 8 cents a share. Revenues declined 2.1% year over year to $1.47 billion, which aligned with the consensus estimate.

Windstream also reaffirmed its full-year 2014 guidance and expects revenue to move -2.5% to 1% to a range of $5.84 billion to $6.05 billion. The Capital IQ Consensus Estimate called for $5.9 billion.

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The stock was down 0.33% to $9.07 at 10:53 a.m.

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Separately, TheStreet Ratings team rates WINDSTREAM HOLDINGS INC as a "buy" with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

"We rate WINDSTREAM HOLDINGS INC (WIN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, notable return on equity, impressive record of earnings per share growth and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 1084.0% when compared to the same quarter one year prior, rising from $10.00 million to $118.40 million.
  • The gross profit margin for WINDSTREAM HOLDINGS INC is rather high; currently it is at 59.42%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.93% trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison 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 greatly exceeded that of the S&P 500.
  • WINDSTREAM HOLDINGS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, WINDSTREAM HOLDINGS INC increased its bottom line by earning $0.39 versus $0.29 in the prior year. For the next year, the market is expecting a contraction of 5.1% in earnings ($0.37 versus $0.39).
  • WIN, with its decline in revenue, slightly underperformed the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • You can view the full analysis from the report here: WIN Ratings Report

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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.

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