Why Frontier Communications' Shares Jumped

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 Frontier Communications (Nasdaq: FTR  ) rose 11% today after the company reported earnings.

So what: In the second quarter, revenue declined slightly to $1.26 billion and the company's profit was nearly cut in half from $32.3 million to $18.0 million, or $0.08 per share on an adjusted basis. But it's all about expectations, and revenue beat slightly while the profit beat the $0.05 EPS mark analysts expected.

Now what: The company is doing a good job keeping margins up and cash flow high but I have a hard time seeing a great reason to bet on the future of the company. Frontier is working to improve broadband but revenue is still falling and the stock isn't a great value at 20 times forward earnings. I'm going to pass on today's move and see if the company can turn the revenue trend around before betting on the stock.

Interested in more info on Frontier Communications? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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