With 2012 just beginning, now's a smart time to gauge how the stocks you're interested in are likely to do this year and beyond. By knowing what stock analysts and fellow investors expect from a stock, you'll be smarter about whether you should buy it for your portfolio -- or sell it if you already own it.
Today, let's take a look at Alaska Communications
Forecasts on Alaska Communications
|Median Target Stock Price||$3.25|
|2011 EPS Estimate||$0.00|
|2012 EPS Estimate||$0.21|
|Expected Annual Earnings Growth, Next 5 Years||9%|
|CAPS Rating (out of 5)||***|
Sources: Yahoo! Finance, Motley Fool CAPS.
Will Alaska Communications stay connected in 2012?
Looking at the numbers, it seems analysts and investors aren't very optimistic about Alaska Communications. The target stock price is only about 14% higher than the current price -- not much of a premium compared to many analyst calls on other stocks. And despite a bump in earnings, analysts actually expect revenue to decline in 2012.
The biggest challenge that Alaska Communications will face comes from Verizon
Most alarmingly, AlaskaComm decided to cut its dividend by more than three-quarters two weeks ago, reducing its $0.215 quarterly payout to $0.05. At a new yield of 7%, the dividend now falls short of fellow rural telecoms CenturyLink
For Alaska Communications to recover, it needs to get back to organic growth in its core services. Without that, its only viable exit strategy will be to seek an acquirer to buy it out.
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