WIN

Discussion in 'Stocks' started by dealmaker, Aug 3, 2017.

  1. dealmaker

    dealmaker

    Windstream Eliminates Dividend, Shares Tank
    The company also announced a share buyback program as the CEO said the stock was undervalued.
    By
    Amey Stone
    Aug. 3, 2017 12:11 p.m. ET

    Yield favorite Windstream Holdings (WIN) eliminated its dividend Thursday morning prompting ia 27% decline in its share price. At noon the stock was trading at $2.73, a $1 decline in share price.

    The move, effective immediately, was annnounced in a separate release from its disappointing second quarter results titled, "Windstream board of directors revises capital allocation strategy. " The company also announced a $90 million share buyback program, effective through the first quarter of 2019.

    CEO Tony Thomas commented:

    Our equity is undervalued especially given our improved strategic direction with enhanced product capabilities, management talent additions and anticipated acquisition synergies of $180 million. The elimination of the dividend along with the $90 million buyback program and delevering that will also occur will create value for all our stakeholders. This is the right path for our company.
    At the current share price, if Windstream hadn't eliminated the dividend, the yield would be 21% (16% at Wednesday's closing price).

    Wells Fargo analyst Jennifer Fritzsche, who has a neutral rating on the stock, thinks the dividend cut is a positive step for CenturyLink. She writes to clients:

    WIN reported light Q2 results that missed our estimates and Street consensus across the board. Broadband and enterprise subscriber losses accelerated in Q2, and service revenue declined both seq. and y/y. While fundamentals were light, the big news is the change in capital allocation strategy. WIN cut the dividend immediately while authorizing a share repurchase plan. With a 16%+ dividend yield we believe the market was already anticipating a revisitation to the dividend strategy. We believe it is the right decision at this time. WIN can use the ~$100MM to de-lever, expedite its capital investment in building out fiber, and buy back shares.
    Shares of fellow telecommunication services prividers Frontier Communications (FTR) and CenturyLink (CTL) were also sharply lower Thursday. Frontier staged a nice rally Wednesday after reporting results, but that was more than eliminated on Thursday when it fell 15% by noon. CenturyLink was down 8% in that time. Its quarterly results, released Wednesday afternoon, had some weak points.

    http://www.barrons.com/articles/windstream-eliminates-dividend-shares-tank-1501776693