Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Windstream Corporation (WIN) Earnings: An Early Look

Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors, and Windstream Corporation (NASDAQ:WIN) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise.

Windstream Corporation (NASDAQ:WIN)Many see rural telecom as a no-growth business without good future prospects, but Windstream Corporation (NASDAQ:WIN) is doing its best to change that perception. But will the company grow enough to support its huge dividend yield? Let’s take an early look at what’s been happening with Windstream over the past quarter and what we’re likely to see in its quarterly report next Tuesday.

Stats on Windstream

Analyst EPS Estimate $0.13
Change From Year-Ago EPS (32%)
Revenue Estimate $1.55 billion
Change From Year-Ago Revenue 28%
Earnings Beats in Past 4 Quarters 0

Source: Yahoo! Finance.

Will Windstream keep investors connected?
Analysts have stuck to their guns in their views on Windstream over the past several months, keeping earnings-per-share estimates stable for the just-ended quarter. For 2013, though, they’ve pulled back on earnings by $0.03 per share, and although the stock has climbed 14% since mid-November, its 7% pullback yesterday raises new concerns for the company and the entire industry.

Windstream has managed to keep its double-digit dividend intact despite the cash-flow pressures of having to finance its acquisition of PAETEC in 2011 with substantial amounts of high-yield debt. So far, the company insists that it has the cash flow to cover financing costs and its dividends, even though traditional measures of free cash flow suggest an unsustainably high payout ratio.

But just yesterday, rival CenturyLink, Inc. (NYSE:CTL) shook the industry when it cut its dividend by more than 25%. Even though Windstream announced last week that it would keep its own quarterly payout stable at $0.25 per share, investors increasingly fear that the dividend is unsustainable, which sent Windstream’s stock downward in sympathy.

The real question remains the same as it has been for some time: whether Windstream can evolve beyond its declining landline and traditional telecom service business in favor of higher-margin broadband, wireless, and business services. So far, selling high-speed Internet access has been lucrative for the company, but finding money for necessary capital expenditures will be tough, especially given the huge advantage that major telecoms AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ) have in competing for business customers across the nation. Similar cash-flow pressures have already forced Frontier Communications Corp (NASDAQ:FTR) to cut its dividend twice in recent years, even as Windstream has held its own stable. Investors haven’t gotten the same reassurance from Frontier that it won’t implement cuts when it releases earnings later next week.

In Windstream’s earnings report, investors should look first at whether Windstream backs off from its assertion last week that it would keep its dividend stable. Any signs of weakening cash flow could further exacerbate the stock’s losses.

The article Windstream Earnings: An Early Look originally appeared on

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!