Out Fox The $treet

Frontier Communications completed a reverse split on Monday. The stock has been absolutely beat up due to this move and a dividend cut. The market needs to focus back on cash flows. Back in May,  my thought  was that  Frontier Communications  ( FTR ) was attractively priced below $1.50. My major concern in owning the telecom stock was a lingering shakeout from the dividend cut and reverse split that has the stock hitting new lows now. Read the full article on Seeking Alpha.  Disclosure: Long CTL. Please review the disclaimer page for more details. 

Summary Frontier Communications has a capital structure too focused on maintaining a historical dividend. High debt load causes interest expense to hit operating income. Stock is reasonably valued but the large stock gains leave limited upside from these levels.  Reviewing the recent results of Frontier Communications (NASDAQ: FTR ) and the capital structure just doesn't make sense. Sure the local communications provider has stable revenues and cash flows that provide a level of opportunity, it doesn't make any sense for the company to continue paying lofty dividends while under a large debt burden. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details.

The provider of local data and voice services might have limited growth prospects, but CenturyLink ( NYSE: CTL     ) continues to innovate to maintain high levels of free cash flow, or FCF. The stock has recently surged following strong earnings and vindication that the large stock-buyback plan is paying off. The company is shifting from legacy voice services to strategic products of high-speed Internet, Prism TV, and managed hosting services. The move isn't as much geared toward reinvigorating growth as stabilizing earnings and FCF potential. The other similar local telecom providers of Frontier Communications ( NASDAQ: FTR     ) and Windstream Holdings ( NASDAQ: WIN     ) sit in a similar situation, attempting to trade legacy revenue for new strategic products to maintain cash flow. Are investors starting to warm up to the sustainability of this model? Read the full article here . Disclosure: Long CTL. Please read disclaimer page f...

One difficult part of investing requires that investors not follow the herd. In the case of CenturyLink ( CTL ) , the company continues to produce solid free cash flow as the market harps on revenue growth and legacy business lines. The stock now trades back around 52-week lows even while providing a net payout yield of around 12% and growing. The company is the third largest telecommunications provider in the U.S. It provides data, voice and managed services in local, national and select international markets. The stock market though focuses squarely on its legacy local voice business and misses the transition to data services including fiber to wireless towers and growing television service. Read the full article at Seeking Alpha. Disclosure: Long CTL. Please read the full disclaimer page for more details.

When Windstream (WIN) reported earnings last week, investors took the stock down to 52-week lows over concerns the company wouldn't have the ability to pay the dividend going forward. The local telecommunications provider missed earnings yet again, but more disappointing is that capital expenditures continue to creep higher. In order to maintain that juicy 12% dividend, the company must produce enough free cash flow to cover the cash distribution. Lately that equation has come into question even with an increasing revenue base as capital expenditures have soared. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

After the close on Tuesday, Rackspace Hosting (RAX) posted earnings that beat analyst estimates and sent the stock soaring over 11% in after hours trading. Revenues jumped 29% year-over-year and net income soared 43% from last year. The company is a leading provider of public and private cloud and hybrid and dedicated hosting services. It delivers open technologies and powers more than 190,000 customers worldwide Unfortunately though for a company with a market cap of $6.6B, it continues to report relatively low free cash flows. This quarter the total free cash flow was only $28.7M or just over $100M on a annualized basis. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

With investors hungry for yield, should they jump into the very high 9.0% yield on Frontier Communications (FTR) ? The answer might surprise you, considering the past of this long-suffering sector. Having been an analyst in the telecommunications industry for 15 years, industry names such as Frontier, that focused on the wireline business, don't conjure up much excitement. Most wrote off those companies for the trash heap years ago. A surprising thing happened on the way to total annihilation: the companies have been able to maintain a considerable amount of the wireline base while also dramatically reducing costs. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details.