Frontier Communications Corp. (FTR - Analyst Report) reported mixed second-quarter 2015 financial results. Earnings managed to beat the Zacks Consensus Estimate while revenues lagged the same.

On a GAAP basis, net loss in the reported quarter was $28 million or a loss of 3 cents per share compared with a net income of $38 million or 4 cents per share in the prior-year quarter. However, quarterly earnings per share of 3 cents surpassed the Zacks Consensus Estimate of 2 cents but declined a substantial 40% year over year.

Total revenue improved 19.3% year over year to $1,368 million but missed the consensus mark of $1,371 million. Out of the total, Voice revenues came in at $515 million, up 9.1%. Data & Internet revenues were $584 million, up 26.1%. Other revenues were $137 million, up a whopping 75.6%. Revenues from Switched access and subsidy totaled $132 million, down 1.5%. Segment-wise, Residential revenues were $615 million, up 23.7% whereas Business revenues came in at $621 million, up 20.3%.

Operating Income

Operating income in the second quarter declined 13.8% year over year to $193 million. Operating income margin was 14.1% compared with 19.5% in the year-ago quarter. Quarterly operating expenses grossed $1,175 million, up 27.3% year over year.

Cash Flow

In the quarter under review, Frontier Communications generated $561 million of adjusted cash from operations compared with $515 million in the prior-year quarter. Adjusted free cash flow in the quarter was $200 million compared with $216 million in the year-ago quarter.

Liquidity

Frontier Communications exited the second quarter with $1,246 million of cash and cash equivalents compared with $682 million at end-2014. Long-term debt decreased to $9,440 million at the end of the reported quarter from $9,486 million at the end of 2014. At the end of the second quarter of 2015, the debt-to-capitalization ratio was 0.60 as against 0.72 at the end of 2014.

Subscribers Statistics

As of Jun 30, 2015, the number of residential customers declined 0.6% to 3,177,000. The average monthly residential revenue per customer was $64.43 compared with $59.64 in the year-ago quarter. Business subscriber count decreased 0.6% year over year to 299,000. The average monthly business revenue per customer was $689.21 against $648.71 in the prior-year quarter.

As of Jun 30, 2015, Frontier Communications had 2,407,400 high-speed broadband subscribers and 569,500 video customers. In the reported quarter, the company gained 29,200 high-speed broadband subscribers but lost 5,000 video users.

Outlook

The company projects free cash flow in the range of $825 million to $865 million for 2015, up from the previous estimate of $785 million to $825 million. Also, Frontier Communications forecasts capital expenditure from business operations between $700 million and $750 million, up from the prior estimate of $650 million to $700 million.

Stocks to Consider

Frontier Communications currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include AT&T, Inc. (T - Analyst Report), Inteliquent, Inc. (IQNT - Snapshot Report) and T-Mobile US, Inc. (TMUS - Analyst Report). All three stocks currently carry a Zacks Rank #2 (Buy).