Intangible Valuation
Value, contrarian, coat tail rider, idiosyncratic research

Frontier Communications: Pessimism Is Overdone, Dividend Is Safe, Stock Is Undervalued

Organized in 1935, Frontier Communications (NYSE:FTR) is the fourth largest telecommunications provider in the United States. Frontier -- serving small and rural communities -- has had a bad rap lately. This negativity is due to a few years of customer losses, primarily attributable to the wireline side of the business.

The market is clearly pessimistic given (1) the short interest with its days-to-cover ratio of 38 days, (2) the large 17% FCF yield, and (3) the dividend of 9.2%. But a survey of the company suggest that optimism is in order. Numerous actions have been taken and business metrics suggest that things are improving. But current opinion is decidedly negative -- hence the opportunity.

Some risks of a...

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