Consolidated Communications Holdings (NASDAQ: CNSL) is
a rural local exchange company, providing voice, data and video services to residential and business customers in Illinois, Texas and Pennsylvania. The company offers a wide range of services, including local and long distance calling, custom calling features, high-speed Internet access, digital TV, carrier access services and directory publishing. Consolidated Communications is the twelfth largest local telephone company in the United States, with more than 280,000 local access lines and nearly 84,000 digital subscriber lines in service. Competitors include AT&T (NYSE: T) and Verizon Communications (NYSE: VZ).
The company pleased investors last week, when it reported Q4 EPS of 20 cents and revenues of $85.0 million. Analysts had been expecting 16 cents and $82.8 million. The CEO noted that quarterly growth was led by strategic broadband products. The DSL subscriber base grew by nearly seven percent.
The stock
popped through 30-day moving average resistance on the news and then moved into a bullish "flag" consolidation pattern. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with three "buys", one "hold" and one "sell". Analysts expect a 10% average annual growth rate, through the next five years. The CNSL Price to Sales ratio (1.24), Price to Cash Flow ratio (5.14) and EBITD Margin (36.79%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 52% of the outstanding shares. Over the past 52 weeks, the stock has traded between $13.60 and $23.71. A stop-loss of $13.00 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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