Frontier Comm (FTR) Debt Reduction Further Supports Dividend - Nomura

January 29, 2013 9:51 AM EST
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Price: $3.48 -1.69%

Rating Summary:
    14 Buy, 10 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 23 | Down: 34 | New: 34
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Nomura Securities reiterated their Buy rating and $5.50 price target on Frontier Communications (NASDAQ: FTR) after the company announced it has redeemed the $503mn 6.25% Senior Note due in January.

This debt reduction will lower annual cash interest expense by $30-35mn, or 5%, further supporting the dividend, according to the firm.

"We estimate Frontier's dividend payout ratio is 53% on our 2013 estimates, the lowest among its peers," analyst Mike McCormack comments. "On a fully taxed basis, Frontier's dividend represents 67% of free cash flow in 2013, versus 92% each at CenturyLink and Windstream."

For an analyst ratings summary and ratings history on Frontier Communications click here. For more ratings news on Frontier Communications click here.

Shares of Frontier Communications closed at $4.51 yesterday.

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