Can Windstream Continue to Buck Strong Headwinds? (WIN)

While an ill wind knocked many stocks to the ground yesterday, shares of Windstream (NASADQ: WIN) managed to stand firm in the buffeting gale. Several reasons may account for the stock’s relative strength on Wednesday. An article out before the market opening highlighted the expected growth among telecommunications companies despite economic headwinds facing many industries. According to Research Insight Corporation, aggregate revenues for the telecommunication industry is forecasted to grow at a rate of 5.3% per annum for the next four years with sales reaching $2.7 trillion worldwide in 2017.

On Tuesday, the company declared a quarterly dividend of 25 cents payable on January 15 to stockholders of record on December 31. The total dividend of $1.00 for the year gives the stock an effective yield of 10.5% as of the closing price last night.

This morning, the company will release its third-quarter financial results. The forecasts from Wall Street analysts call for a profit of $0.13 per share on revenues of $1.54 billion. In the previous quarter, Windstream earned $0.12 per share, which fell a penny shy of expectations. For the year, analysts foresee the company earning a profit of $0.51 per share. Frontier Communications (NYSE: FTR) reported earnings on Tuesday that showed revenues beating expectations. Investors surely hope for the same out of Windstream’s results.

Despite standing stoic at the end of the day on Wednesday, Windstream shares bowed early in the trading session as a wave of selling pressure swept over the equity markets. The stock opened the session in slightly negative territory at a price of $9.39. Sellers wasted little time dumping their shares and the stock dipped to an intraday low of $9.26 within the first half-hour of trading. While other stocks continued to fade, Windstream shares rallied back. By the time they served lunch on the east coast, the stock had touched its high for the day at $9.60. Shares ended yesterday with a loss of two pennies and closed at a price of $9.42. Traders swapped over 10.9 million shares compared to an average daily volume of 6.43 million shares.

The last 12 months have been anything but smooth sailing for Windstream investors. After hitting an annual high of $12.55 in February, the stock sold off over the course of the following three months to a 52-week low when shares traded for $9.00. In one day, share prices fell by 10%. Before hitting the lows for the year so far, the company announced it was restructuring the management team. Share prices rebounded to $11.00 by mid-September, but once again sold off hard to its present level. Investors hope the dividend and the possibility of a better-than-expected earnings report can calm choppy seas.

Eighteen analysts cover the company with two-thirds of them rating the stock as “hold” and another five giving it a “buy” recommendation. The consensus has a price target of $10.98 on Windstream shares.

Windstream Corporation provides advanced networking solutions and managed services to businesses in addition to offering broadband services that include high speed Internet and telephone service to consumers primarily living in rural areas. The Little Rock, Arkansas-based company was founded in 2006.

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Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).

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