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Uniti Group Inc UNIT

Morningstar Rating
$5.64 +0.07 (1.26%)
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Company Report

Uniti's Business Should Have Little Volatility, but High Debt Causes Very High Stock Uncertainty

Uniti’s business is dominated by its triple-net leases, which results in little variability in operating results. The firm’s lease with Windstream makes up nearly 75% of total revenue and 90% of EBITDA. Following Windstream’s bankruptcy in 2019, Uniti and Windstream renegotiated the lease, which has an initial term that runs through 2030. The renegotiation leaves Uniti with very stable and predictable financial results, but the firm has sought to grow and diversify. We doubt the non-Windstream business can become large enough to move the needle.

Price vs Fair Value

UNIT is trading at a 53% discount.
Price
$5.64
Fair Value
$16.00
Uncertainty
Very High
1-Star Price
$59.00
5-Star Price
$2.00
Economic Moat
Slgl
Capital Allocation
Mjjfgjxm

Bulls Say, Bears Say

Bulls

Uniti’s renegotiation of its Windstream lease gives the ability to add new leases to existing fiber, which can be very lucrative, as it requires little new spending.

Bears

Uniti is in a weak financial position, which at best impairs its ability to diversify its customer base and grow and at worst makes bankruptcy risk a constant threat.

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News

Trading Information

Previous Close Price
$5.57
Day Range
$5.445.65
52-Week Range
$2.946.01
Bid/Ask
$5.64 / $5.72
Market Cap
$1.35 Bil
Volume/Avg
64 / 1.8 Mil

Key Statistics

Price/Earnings (Normalized)
6.77
Price/Sales
1.04
Dividend Yield (Trailing)
10.64%
Dividend Yield (Forward)
10.64%
Total Yield
10.64%

Company Profile

Uniti is a REIT with about 140,000 route miles of fiber in the U.S., primarily in the Southeast. Uniti reports its business in two segments: leasing and fiber. Leasing currently makes up about 75% of total revenue and consists mostly of Uniti's master lease agreement with Windstream. Windstream spun off a substantial portion of its network assets to form Uniti in 2015, and Uniti immediately leased the entire portfolio back for Windstream's exclusive use. Other leasing revenue stems from sale-leaseback transactions with other fiber holders. Uniti generates fiber revenue by leasing dark and lit fiber to wireless carriers and other enterprises.
Sector
Real Estate
Industry
REIT - Specialty
Stock Style Box
Small Core
Total Number of Employees
784

Competitors

Valuation

Metric
UNIT
LUMN
VZ
Price/Earnings (Normalized)
6.772.958.52
Price/Book Value
3.851.84
Price/Sales
1.040.111.26
Price/Cash Flow
2.860.494.48
Price/Earnings
UNIT
LUMN
VZ

Financial Strength

Metric
UNIT
LUMN
VZ
Quick Ratio
0.110.480.51
Current Ratio
0.111.190.69
Interest Coverage
0.80−8.824.01
Quick Ratio
UNIT
LUMN
VZ

Profitability

Metric
UNIT
LUMN
VZ
Return on Assets (Normalized)
3.66%3.01%4.66%
Return on Equity (Normalized)
17.04%18.99%
Return on Invested Capital (Normalized)
17.73%7.61%7.89%
Return on Assets
UNIT
LUMN
VZ
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