Frontier Has a 4Q15 Earnings Beat: Broadband Subscribers Surge
Frontier’s scale and dividend yield
In the previous parts of this series, we’ve seen certain aspects of Frontier Communications’ (FTR) 4Q15 performance. In this part of the series, we’ll look at some of Frontier’s and its peers’ value-centric measures in the US wireline telecommunication market. Let’s start with the scale of Frontier compared to some of its peers.
As you can see in the above bar graph, as of February 23, 2016, Frontier had a market capitalization of ~$5.9 billion. In the US wireline space, this metric for Windstream (WIN) and CenturyLink (CTL) was ~$0.65 billion and ~$16.1 billion, respectively. This metric for Verizon (VZ) and AT&T (T), the integrated US telecom players, was ~$206.3 billion and ~$226 billion, respectively, as of the same date.
Enterprise value multiples of Frontier and some of its peers
As of February 23, 2016, Frontier and CenturyLink had forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiples of ~5.5x and ~5.4x, respectively. Verizon and AT&T had an EV-to-EBITDA metric of ~6.7x and ~6.3x, respectively, as of the same date.
Dividend yields of Frontier and its peers
Now let’s look at Frontier’s dividend yield. As of February 23, 2016, Frontier had a forward annual dividend yield of ~8.3%. The same metric for CenturyLink was ~7.4%. The figures for integrated players AT&T and Verizon were ~5.2% and ~4.5%, respectively, as of the same date.
For a diversified exposure to select telecom companies in the United States, you can consider investing in the SPDR S&P 500 ETF (SPY). SPY held a total of ~2.4% in some of the US telecom companies at the end of December 2015.
In the final part of this series, we’ll look at Wall Street analyst recommendations for Frontier as of February 23, 2016.
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