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Why Windstream Shares Plunged

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 telephone company Windstream (Nasdaq: WIN  ) sank as much as 16% today after its quarterly results disappointed Wall Street.

So what: While Windstream's first-quarter miss wasn't all that bad (adjusted EPS of $0.13 on revenue of $1.55 billion versus the consensus of $0.14 and $1.56 billion, respectively), investors seem worried that it's a sign of even bigger disappointments down the road. In fact, the stock is hitting a new two-year low on the news.   

Now what: I'd look into this pullback as a possible buy-in opportunity. "I am extremely confident in the business that we have built," CEO Jeff Gardner reassured investors. "Through targeted acquisitions and our strategic growth initiatives, we have assembled an attractive set of assets capable of generating consistent cash flows to support our dividend over a long period of time and to provide other opportunities in the future to increase shareholder value." With that dividend now yielding a juicy 10%, long-term income investors might want to take a closer look.

Interested in more info on Windstream? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Read/Post Comments (4) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 10, 2012, at 12:13 PM, bmc007 wrote:

    Absolutely - a buying opportunity!

  • Report this Comment On May 10, 2012, at 1:32 PM, CluckChicken wrote:

    This has hurt my holds as one would expect but from the reports I have seen nobody see anything that looks to put a damper on the dividend (which for me is over 9%). Next ex-date should be June 28th.

    S&P released this around 11am:

    (S&P Capital IQ) WIN posts Q1 EPS of $0.13, vs. $0.19, below our $0.16 estimate, due to in part to a higher share count. EBITDA was slightly below our forecast, due to the suspension of certain wholesale products. We are encouraged by merger integration efforts, relatively stable access lines and 3% growth in business revenues that should support EBITDA improvement throughout '12. While we cut our '12 EPS estimate $0.09 to $0.61 largely on non-operating items, we see growth to $0.70 in '13. We trim our 12-month target price by $1 to $13 and see dividend, yielding 9.7%, as well supported.

  • Report this Comment On May 10, 2012, at 9:10 PM, watersports2001 wrote:

    I took a chance as well. It still scared the fool out of me when it triggered an alert I set when it hit 10 dollars.

    I probably wouldn't have invested more except that it's already started crawling back up.

    MF now you just have to make an article for when it gets back up to $11.50[points]

  • Report this Comment On May 10, 2012, at 9:30 PM, OccupyMyNutsack wrote:

    I jumped all over this opportunity. Great dividend with consistency too. The worst that happens, it gets cheaper and I buy more to up my dividend some more. Gotta love a sell off because it came in one cent below eps on estimates but the figures all still look great with this one. Thanks panic investors!

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Windstream CAPS Rating: **