Alltel Catching Wall Street's Eye.
The article said Wall Street is beginning to take notice of Alltel and for good reason.
"While other telecom-service stocks stumble, Alltel has consolidated its position as the nation's fifth largest wireless phone carrier and has seen its price surge 34 percent in the past three months to its current rate of $67.94. With a market value of $21.2 billion, Alltel is only slightly smaller than Sprint ($24.3 billion)."
"Even though Alltel is still 20 percent off its 52-week high, the stock has held up better than its rivals....
"The reason is simple. Alltel is the rare combination of an income stock and a growth stock. The company provides investors with regular annual dividends ($1.32 a share) and with a chance for rapid stock appreciation befitting its pivotal position in the wireless world," the article said.
Analyzing its future, Bartash continued:
"Some wonder how long Alltel can continue on its current path. The company eventually will need to find more markets for growth, potentially forcing it to butt heads with larger carriers. Right now there are six major national wireless operators and at least three large regional providers."
"From that Perspective," the article said, "the obvious option is to sell out. Last year, Alltel stock spiked several times on rumors of a buyout." Others saw Alltel the one who would buy rather than be acquired.
"Many investors would like to see the company sell off its information-services businesses. That consists of three units that each register about $400 million in annual sales -- soft ware and consulting services for big banks; mortgage processing (Alltel processes more than half the loans in the U.S.); and customer service and billing for subscribers of Alltel and other telecommunications carriers.
The article continued:
"While those businesses have historically grown at double-digit rates, growth has tapered off to around 4 percent to 5 percent.
"In the view of many, Alltel should just keep doing what it's been doing. The carrier is expected to grow earnings 14 percent in the next two years, according to the consensus estimate of analysts surveyed by First Call/Thomson Financial. Revenue is expected to climb to around $8 billion in 2001, up from just $3.3 billion in 1997.
"Even with its recent appreciation, Alltel is arguably undervalued. Analysts peg its breakup value at as much $100. Jefferies & Co., a Wall Street brokerage, said the company trades at less than eight times its expected cash-flow growth in 2001, compared to 13 times for rival carriers," the article concluded.
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|Title Annotation:||positive write-up on MarketWatch.com|
|Comment:||Alltel Catching Wall Street's Eye.(positive write-up on MarketWatch.com)|
|Article Type:||Brief Article|
|Date:||Jan 29, 2001|
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