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Why Cincinnati Bell's Shares Popped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Ohio-based telecom provider Cincinnati Bell (NYSE: CBB  ) were dialing up gains today, rising as much as 12% in intraday trading after the company announced first-quarter results.

So what: On the whole, there really wasn't that much that was exciting about Cincinnati Bell's first quarter. Revenue crept up slightly from $361 million a year ago to $363 million, but that was short of the $367 million that Wall Street was expecting. On the bottom line, earnings per share fell from a year ago, from $0.08 to $0.05. That tally also missed analysts' estimates, which were looking for $0.06 in per-share earnings.

Now what: So far, it may seem a bit confounding that shares are up today. However, the company provided full-year revenue and EBITDA guidance that was slightly better than what analysts had been anticipating. Additionally, the company announced that it's pursuing an IPO for its data-center business -- a faster-growing segment that saw a 21% year-over-year revenue increase in the first quarter. Management is looking at this spinoff as a way to maximize shareholder value while helping pay down debt at the telecom business and provide headroom for the datacenter business to continue to grow.

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Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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10/21/2016 4:01 PM
CBB $19.75 Down +0.00 +0.00%
Cincinnati Bell CAPS Rating: ***