Morningstar Rating

Stock Research and Analysis

by Michael Hodel, CFA

Bulls Say

Phone companies in rural markets face less competition from cable and wireless rivals than their more urban peers. Windstream should be able to maintain strong cash flow for a long time as a result.
Recent acquisitions provide management with a fantastic opportunity to cut costs and build on existing customer relationships, providing a source of growth to offset the declining phone business.
Windstream's Internet access penetration rates are among the highest in the industry. Read more 

Bears Say

Competition is increasing. Cable companies across the country now offer phone service to most of their customers. The quality of wireless service is also improving, with new technologies threatening to make wireless data services much more popular.
The heavy use of debt to finance acquisitions has weakened Windstream's balance sheet. The proposed REIT transaction seems as much like an attempt to ensure access to the capital markets as an effort to save taxes.
Past acquisitions have come at fair, if not rich, prices and are unlikely to add much shareholder value as a result. Read more 

Management

Alltel executives filled the majority of high-level positions at Windstream following the firm's creation in 2006 via the merger of Alltel's fixed-line business with Valor Communications. Alltel's former CFO, Jeff Gardner, assumed the CEO position.   Read more 

Profile

Windstream provides telecom services, including telephone and Internet access, to about 600,000 business locations and 1.6 million households. The firm’s operations are   Read more 

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