NEW YORK (TheStreet) -- Shares of Frontier Communications (FTR) were gaining 0.3% to $6.56 after-hours Thursday after the telecoms services company announced it will increase its quarterly dividend by 5%.
Frontier Communications will increase its quarterly dividend to 10.5 cents a share from 10 cents a share when the company announces its dividend for the first quarter of 2015. The new quarterly dividend increases the company's annual dividend to 42 cents from 40 cents a share.
The company plans to declare its first quarter 2015 dividend in February 2015 for payment in late March 2015.
"Today's announcement reflects the board's confidence in Frontier's business and financial strength and our solid execution performance in integrating the Connecticut acquisition," Frontier Communications Chairman and CEO Maggie Wildrotter said in a statement.
TheStreet Ratings team rates FRONTIER COMMUNICATIONS CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate FRONTIER COMMUNICATIONS CORP (FTR) a BUY. This is driven by multiple strengths, 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, solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Diversified Telecommunication Services industry average. The net income increased by 18.6% when compared to the same quarter one year prior, going from $35.40 million to $41.99 million.
- Compared to its closing price of one year ago, FTR's share price has jumped by 48.92%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- 43.79% 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, the net profit margin of 3.68% trails the industry average.
- FRONTIER COMMUNICATIONS CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, FRONTIER COMMUNICATIONS CORP reported lower earnings of $0.12 versus $0.14 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus $0.12).
- FTR, with its decline in revenue, slightly underperformed the industry average of 0.9%. Since the same quarter one year prior, revenues slightly dropped by 3.7%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
- You can view the full analysis from the report here: FTR Ratings Report