Is Windstream Undervalued?

With shares of Windstream (NASDAQ:WIN) trading around $8, is WIN an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Windstream is a provider of advanced communications and technology solutions, including managed services and cloud computing, to businesses nationwide. In addition to business services, the company offers broadband, voice and video services to consumers in primarily rural markets. It has operations in 48 states and the District of Columbia, a local and long-haul fiber network spanning approximately 115,000 miles, a robust business sales division and 21 data centers offering managed services and cloud computing. A mix of fiber optic and copper facilities connect its customers with the core network. With operations spanning most of the country, Windstream is poised to continue to offer new age technology to an expanding user base in upcoming years.

T = Technicals on the Stock Chart are Weak

Windstream stock has witnessed a bit of selling pressure since its initial public offering in 2005. Any reasonable pop has been used as an exit opportunity for many investors. The stock is now trading near prices not seen since the financial crisis. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Windstream is trading below its declining key averages which signal neutral to bearish price action in the near-term.

WIN

(Source: Thinkorswim)

Taking a look at the implied volatility (red) and implied volatility skew levels of Windstream options may help determine if investors are bullish, neutral, or bearish.

EXCLUSIVE OFFER! Take Advantage of the Tax Relief 50% Off Sale for a Limited Time. CLICK HERE for your Weekly Stock Cheat Sheets NOW!

Implied Volatility (IV)

30-Day IV Percentile

90-Day IV Percentile

Windstream Options

35.22%

56%

51%

What does this mean? This means that investors or traders are buying a significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

Put IV Skew

Call IV Skew

May Options

Steep

Average

June Options

Steep

Average

As of today, there is an average demand from call buyers or sellers and high demand by put buyers or low demand by put sellers, all neutral to bearish over the next two months. To summarize, investors are buying a significant amount of call and put option contracts and are leaning neutral to bearish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion…

More Articles About:   ,