Windstream's 4Q15 Results Surprised Analysts: What Will 2016 Bring?
Windstream’s scale
Previously in this series, we looked at certain aspects of Windstream’s (WIN) financial and operating performance in 4Q15. In this part of the series, we’ll look at select value-centric metrics for Windstream and some of its peers in the US wireline telecom market. Let’s start with Windstream’s scale compared to some of its peers.
As you can see in the above chart, as of February 26, 2016, Windstream had a market capitalization of ~$0.66 billion. Meanwhile, in the US wireline space, Frontier Communications (FTR) and CenturyLink (CTL) had market capitalizations of ~$6.3 billion and ~$16.4 billion, respectively.
Enterprise value multiples
As of February 26, 2016, Windstream had a current year EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple of ~6.9x. Meanwhile, Frontier Communications and CenturyLink had EV-to-EBITDA metrics of ~5.6x and ~5.5x, respectively, as of the same date.
Dividend yields
Now, let’s look at the telecom company’s dividend yield. As of February 26, 2016, Windstream had a forward annual dividend yield of ~8.3%. Meanwhile, the same metric for CenturyLink and Frontier Communications was ~7.2% and ~8.1%, respectively.
Instead of taking direct exposure to the stocks of players in the US wireline industry, you could consider taking diversified exposure to the industry by investing in the SPDR S&P 500 ETF (SPY).
SPY held a total of ~2.4% in AT&T (T), Verizon (VZ), CenturyLink (CTL), Frontier Communications (FTR), and Level 3 Communications (LVLT) at the end of December 2015.
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