Please ensure Javascript is enabled for purposes of website accessibility

Why Frontier Communications Corp. Stock Is Soaring Today

By Anders Bylund – May 2, 2018 at 12:05PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Texas, Florida, and California FiOS markets finally saw more subscribers signing on than signing off, resulting in a smaller loss than expected.

What happened

Shares of regional telecom Frontier Communications (FTR) jumped as much as 25.2% on Wednesday morning, sparked by a solid earnings report. The stock is still trading more than 20% higher as of 11:05 a.m. EDT.

So what

In the first quarter of 2018, Frontier's sales fell 7% year over year to land at $2.2 billion. On the bottom line, adjusted net losses more than quadrupled from $0.11 to $0.58 per share. If that sounds bad, Wall Street had been bracing for even worse. The consensus earnings estimate called for a loss of $0.91 per share.

Businessman sitting at desk with computer, crossing his fingers hard with his eyes closed.

Expecting a real turnaround? Don't hold your breath. Image source: Getty Images.

Now what

This was the first quarter in which Frontier saw positive customer growth for FiOS services in the Florida, Texas, and California markets, though subscriber churn in these markets remains high. The company is struggling to make that $10.5 billion 2015 buyout of Verizon Communications' largest FiOS markets pull its weight.

It's true that Frontier exceeded Wall Street's earnings targets this time, but management did not boost its full-year guidance targets based on these results. And even after today's huge jump, the stock is still trading 64% lower over the last 52 weeks and a heart-stopping 90% lower in three years. In other words, this doesn't look like a beleaguered company springing back to life. It's more like a rare moment of positivity while the larger story remains overwhelmingly sad.

Anders Bylund has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends VZ. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Frontier Communications Corporation Stock Quote
Frontier Communications Corporation

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/01/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.