Here's Why Investors Should Retain Cincinnati Bell Stock

On Jun 23, 2017, we issued an updated research report on Telecom service provider, Cincinnati Bell Inc. (NYSE:CBB) . Over the past three months, the stock price of the company contracted 2.16% while the Zacks categorized Diversified Communication Services industry declined 1.30%.

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Cincinnati Bell is focused on transforming itself from a legacy copper-based telecommunications company to a technology company. Its contemporary fiber assets are providing services to both individual as well as business customers with flexible data, video, voice and IP solutions.

On Jun 22, 2017, The Cincinnati Reds and CBTS, a wholly-owned subsidiary of Cincinnati Bell announced a new partnership. This will allow Reds Front Office executives and scouts to watch players in real time at any one of the team’s seven locations across the United States. The Reds are leveraging on CBTS’ Network as a Service (NaaS) solution – built on Cisco Systems, Inc.’s (NASDAQ:CSCO) Cisco Meraki technology – to create pop-up networks. These will be available at each of the team’s minor league facilities and Spring Training facility that are accessible through Meraki’s Auto Virtual Private Network technology.

In Nov 2016, Cincinnati Bell inked a deal with The E.W. Scripps Company, an American broadcasting company in Cincinnati. Per the terms, Scripps’ wholly owned subsidiary – Newsy, a digital video news channel – will now be offered through its Fioptics cable television services. Newsy is accessible on devices such as Apple Inc.’s (NASDAQ:AAPL) Apple TV, DISH Network Corporation’s (NASDAQ:DISH) Sling TV, Roku, Amazon.com Inc (NASDAQ:AMZN).’s Fire TV and Google (NASDAQ:GOOGL) Chromecast. It is also available on mobile apps like iOS, Android and Kindle Fire.

During the same period, Cincinnati Bell also announced an alliance with Eero Inc., maker of the world’s first whole-home WiFi system. Per the deal, the company will be offering Eero’s whole-home Wi-Fi system at eight of its retail stores across Greater Cincinnati, helping it to grow its FTTH (Fiber to the home) customer base.

However, the company continues to experience erosion in high margin local access lines. With Digital Subscriber Line (DSL) and cable modems gaining widespread acceptance, customers are deactivating the extra phone lines that were used to access the Internet via dial-up modem. In addition, the shift toward wireless services and aggressive rollout of VoIP and long distance services by Tier-1 competitors such as AT&T (NYSE:T) and Verizon in Cincinnati and Dayton has further contributed to access line erosion.

Also, Cincinnati Bell is confronting competitive threats from local cable operators who aggressively deploy local phone service in addition to television. This has already resulted in the loss of major business customers. Additionally, improved housing market in Greater Cincinnati has led residents to switch homes, thus increasing multi-tenant Fioptics churn.

We believe that these are the reasons behind the stock currently carrying a Zacks Rank #3.

The Best & Worst of Zacks

Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>