Why nTelos Holdings Corp. Shares Dropped Today

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 nTelos Holdings Corp. (NASDAQ: NTLS  ) fell more than 10% early Wednesday, and then partially recovered to close down around 7%, after the Virginia-based wireless carrier reported disappointing first-quarter results.

So what: Quarterly operating revenue increased 2% year over year to $122.1 million, which translated to net income of $0.06 per diluted share. By comparison, nTelos achieved earnings of $0.25 per share this time last year. Analysts, on average, were looking for significantly higher earnings of $0.30 per share on sales of $125.1 million.

Still, nTelos reiterated its full-year 2014 guidance for adjusted EBITDA between $140 million and $150 million, and capital expenditures between $85 million and $95 million.

Now what: nTelos Holdings CEO James Hyde added: "The competitive atmosphere in the wireless industry showed no signs of tempering in the first quarter of 2014. Against this challenging backdrop, nTelos has successfully adapted, positioning nControl as a compelling alternative to the restrictive plans offered by the national carriers."

To his credit, nTelos did just post its ninth consecutive quarter of positive subscriber growth, and Hyde went on to state they "plan to aggressively introduce additional features and options that will further enhance the offering."

At the same time, however, it's hard to get excited when those subscribers don't translate to nTelos' bottom line, and keep in mind it only added 3,400 subscribers in Q1 -- compared with 11,400 in the same year-ago period -- to bring its total to 468,000. In the end, even with shares trading at a modest 13 times next year's expected earnings, I think there are better places for long-term investors to put their money to work.

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