Uniti Group (UNIT) AI Stock Analysis

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Uniti Group

(NASDAQ:UNIT)

Rating:55Neutral

Price Target:

$5.00

▲( 14.16% Upside)

Uniti Group's stock score reflects a mixed picture. Strong revenue growth and strategic initiatives like the Windstream merger provide optimism. However, challenges with profitability, high leverage, and a bearish technical trend weigh down the score. The dividend yield offers some appeal, but caution is advised given the financial risks.

Positive Factors

Fiber Demand

Fiber demand remains tariff and recessionary resistant with a strong lease-up mix.

Growth Potential

Kinetic plans to accelerate its FTTH deployment, aiming to reach 2 million homes earlier than planned, signaling growth potential.

Market Expansion

Uniti sees significant future growth in the Fiber Network market, with the total addressable market expected to increase to $50B by 2030.

Negative Factors

Financial Guidance

UNIT traded lower after reporting mixed financials and lowering its guide for net income attributable to common shareholders and FFO.

Interest Expense

Interest expense guidance was increased by $3mn and net income attributable to common shareholders was reduced 4.7% at the mid-point.

Wireless Bookings

Wireless bookings came in flat for 2024, which was below management's expectations.

Uniti Group (UNIT) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.10B

Dividend Yield3.34%

Average Volume (3M)2.21M

Price to Earnings (P/E)17.1

Beta (1Y)0.93

Revenue Growth2.44%

EPS Growth305.26%

CountryUS

Employees758

SectorReal Estate

Sector Strength56

IndustryREIT - Specialty

Share Statistics

EPS (TTM)0.05

Shares Outstanding245,453,410

10 Day Avg. Volume2,446,249

30 Day Avg. Volume2,210,585

Financial Highlights & Ratios

PEG Ratio-0.11

Price to Book (P/B)-0.44

Price to Sales (P/S)0.00

P/FCF Ratio93.54

Enterprise Value/Market Cap6.20

Enterprise Value/Revenue1.39

Enterprise Value/Gross Profit8.76

Enterprise Value/Ebitda1.95

Forecast

1Y Price Target

$6.36

Price Target Upside45.21% Upside

Rating ConsensusHold

Number of Analyst Covering5

Uniti Group Business Overview & Revenue Model

Company DescriptionUniti, an internally managed real estate investment trust, is engaged in the acquisition and construction of mission critical communications infrastructure, and is a leading provider of wireless infrastructure solutions for the communications industry. As of September 30, 2020, Uniti owns 6.7 million fiber strand miles and other communications real estate throughout the United States.

How the Company Makes MoneyUniti Group Inc. generates revenue primarily through leasing its communications infrastructure assets, such as fiber networks and wireless towers, to telecommunications companies and service providers. The company's revenue model is based on long-term lease agreements, which provide predictable and stable cash flows. Key revenue streams include lease payments from tenants who utilize Uniti's fiber networks and tower sites to deliver broadband and wireless services. Additionally, Uniti may engage in strategic partnerships and joint ventures to expand its infrastructure and service offerings, further contributing to its earnings. The company also explores opportunities for growth through acquisitions and development of new infrastructure to meet the increasing demand for high-capacity communication networks.

Uniti Group Financial Statement Overview

Summary

Uniti Group exhibits a mixed financial performance with solid revenue growth and operational margins. However, profitability concerns and negative equity highlight financial instability risks. Improvements in cash flow management are encouraging, yet the balance sheet structure remains a significant concern. The company needs to address its leverage and profitability issues for a healthier financial outlook.

Income Statement

Positive

Uniti Group has demonstrated a steady growth in revenues with a CAGR over the years. The gross and EBIT margins are healthy, indicating solid operational efficiency. However, the net income remains volatile, with significant fluctuations, indicating underlying profitability issues. The company has shown improvement in profitability with a net income turning positive in 2024 compared to losses in previous years.

Balance Sheet

Neutral

The balance sheet reflects a concerning financial structure with negative stockholders' equity, driven by high liabilities. Despite this, the reduction in total debt in 2024 is notable. The debt-to-equity ratio is not applicable due to negative equity. The equity ratio is negative, highlighting potential financial instability.

Cash Flow

Neutral

Uniti Group shows a positive trend in operating cash flows, indicating good cash generation capacity. Free cash flow has improved significantly in 2024, turning positive, showing better capital management. The operating cash flow to net income ratio is solid, but the volatile net income affects free cash flow ratios, highlighting cash flow sustainability risks.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.17B	1.15B	1.13B	1.10B	1.07B
	Gross Profit
711.74M	695.03M	1.12B	1.10B	907.70M
	EBIT
606.72M	578.38M	599.21M	542.98M	461.62M
	EBITDA
882.80M	642.35M	891.99M	833.92M	92.42M
	Net Income Common Stockholders
91.31M	-81.71M	-10.49M	123.66M	-718.91M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
155.59M	62.26M	43.80M	58.90M	77.53M
	Total Assets
5.28B	5.03B	4.85B	4.81B	4.73B
	Total Debt
5.88B	5.63B	5.27B	5.11B	4.83B
	Net Debt
5.73B	5.56B	5.23B	5.05B	4.75B
	Total Liabilities
7.73B	7.51B	7.12B	6.92B	6.80B
	Stockholders Equity
-2.45B	-2.49B	-2.27B	-2.13B	-2.14B
Cash Flow		Free Cash Flow
11.86M	-63.87M	32.55M	113.30M	-159.85M
	Operating Cash Flow
366.69M	353.13M	460.12M	499.16M	157.23M
	Investing Cash Flow
-272.20M	-411.31M	-392.02M	-321.22M	1.39M
	Financing Cash Flow
27.08M	76.64M	-78.58M	-196.57M	-223.91M

Uniti Group Technical Analysis

Technical Analysis Sentiment

Negative

Last Price4.38

Price Trends

50DMA

4.75

Negative

100DMA

5.13

Negative

200DMA

5.23

Negative

Market Momentum

MACD

-0.07

Positive

RSI

40.04

Neutral

STOCH

26.09

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For UNIT, the sentiment is Negative. The current price of 4.38 is below the 20-day moving average (MA) of 4.69, below the 50-day MA of 4.75, and below the 200-day MA of 5.23, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 40.04 is Neutral, neither overbought nor oversold. The STOCH value of 26.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for UNIT.

Uniti Group Risk Analysis

Uniti Group disclosed 33 risk factors in its most recent earnings report. Uniti Group reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

Shareholder litigation could prevent or delay the closing of our Merger with Windstream or otherwise negatively impact our business and operations. Q4, 2024

If our Merger with Windstream is completed, Uniti shareholders may recognize taxable gain or loss for U.S. federal income tax purposes as a result of the transaction, and be liable for tax with respect to any such gain, even though they will not receive any cash in the transaction. Q4, 2024

If our Merger with Windstream is completed, the Windstream Leases will become intercompany agreements; the performance and financial condition of New Uniti will remain subject to Windstream's ability to satisfy its payment and other obligations under the Windstream Leases. Q4, 2024

Uniti Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOR	70 Outperform	$1.00B	5.73	10.81%	―	-5.60%	-17.86%
CIM	63 Neutral	$1.13B	9.32	8.09%	10.54%	7.13%	64.82%
SAFE	60 Neutral	$1.11B	10.46	4.51%	4.57%	1.54%	―
Sector *	60 Neutral	$2.82B	10.38	0.33%	8508.19%	5.98%	-17.49%
DX	60 Neutral	$1.34B	16.14	6.01%	13.44%	73.74%	-34.10%
FBRT	56 Neutral	$955.98M	17.08	5.07%	12.54%	-6.28%	-49.57%
UNIT	55 Neutral	$1.10B	17.12	-3.72%	3.34%	2.44%	305.26%

* Real Estate Sector Average

Performance Comparison

UNIT

Uniti Group

4.38

1.09

33.13%

CIM

Chimera Investment

13.14

1.38

11.73%

Dynex Capital

12.03

1.18

10.88%

FOR

Forestar Group

18.91

-14.61

-43.59%

SAFE

Safehold

14.75

-4.68

-24.09%

FBRT

Franklin BSP Realty Trust

10.81

-0.74

-6.41%

Uniti Group Earnings Call Summary

Earnings Call Date:May 06, 2025

(Q1-2025)

% Change Since: -12.40%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

The earnings call reflects a generally positive outlook with strong quarterly performance, significant progress in fiber expansion, and positive developments regarding the merger with Windstream. These factors contribute to an optimistic future outlook despite minor challenges such as non-recurring revenue delays and broader economic risks.

Q1-2025 Updates

Positive Updates

Strong Quarterly Performance

Uniti achieved mid-single digits top-line growth and high single-digit adjusted EBITDA growth, reiterating full-year revenue, adjusted EBITDA, and AFFO guidance. Consolidated revenues were $294 million, and adjusted EBITDA was $238 million.

Significant Progress in Fiber Expansion

Fiber expansion within the Kinetic footprint is expected to double the number of homes passed, reaching 2 million homes by the end of the year, two years earlier than expected.

High Lease-Up Success

The lease-up rate reached 72%, nearing company records, with significant contributions from hyperscalers.

Positive Market and Regulatory Developments

Favorable regulatory changes at the FCC and NTIA, supporting fiber infrastructure growth with relaxed rules on retiring copper networks and streamlined permitting processes.

Merger with Windstream Progress

Received shareholder and PUC approvals for the merger with Windstream, with expectations to close by July or August. Approximately 97% of shareholders supported the transaction.

Improved Cost of Capital

Uniti's cost of capital improved significantly, with debt yields decreasing from over 12% to around 7.5% over two years.

Negative Updates

Non-Recurring Revenue Delay

Uniti Fiber experienced lower than expected non-recurring revenue due to a delay in a $4 million fiber sale to a government customer.

Capital Markets Volatility

Despite resilience in the ABS market, broader capital markets remain volatile, posing potential risks.

Tariff and Economic Risks

Potential impact of proposed tariff changes and increased recession risk, though expected to have minimal direct effect on operations.

Company Guidance

In the first quarter of 2025, Uniti achieved strong performance and maintained its guidance for full-year revenue, adjusted EBITDA, and AFFO, despite broader market volatility. The company anticipates mid-single-digit top-line growth and high single-digit adjusted EBITDA growth for the year. Uniti's plan to fund new initiatives remains on track, with significant progress noted in the expansion of fiber within the Kinetic footprint, aiming to reach 2 million homes by the end of the year. The merger with Windstream, which received 97% shareholder approval and 16 of 18 required PUC approvals, is expected to close in the second half of 2025. Uniti's consolidated revenues for Q1 were $294 million, with an adjusted EBITDA of $238 million and AFFO per diluted share of $0.35. The company expects full-year consolidated revenue and adjusted EBITDA to remain within the projected ranges, with anticipated AFFO per diluted share between $1.40 and $1.47, representing a 6% increase from the previous year.

Uniti Group Corporate Events

M&A TransactionsBusiness Operations and StrategyFinancial Disclosures

Uniti Group Progresses Towards Merger with Windstream

Positive

May 1, 2025

Windstream Holdings II, LLC, a successor to Windstream Holdings, Inc., reported its financial results for the quarter ending March 31, 2025. The company highlighted a continued expansion of its fiber network, with 38,000 new premises constructed, increasing fiber coverage to 38% in its Kinetic markets. Fiber subscriber growth was robust, with a 16% year-over-year increase, and fiber penetration reached 28%. The company also reported a 20% year-over-year growth in fiber subscriber revenue. Additionally, Windstream completed a sale of IPv4 assets for over $25 million and achieved an adjusted EBITDAR of $370 million, up $40 million sequentially. The company is progressing towards a planned merger with Uniti Group, expected to close in the early second half of 2025.

Executive/Board ChangesBusiness Operations and Strategy

Uniti Group Approves New Equity Grant Agreements

Neutral

Apr 17, 2025

On April 16, 2025, Uniti Group‘s Board approved new grant agreements for restricted shares and stock unit awards under its 2015 Equity Incentive Plan, aligning terms for vesting upon retirement, death, disability, and changes in control. Additionally, Harold Zeitz was nominated for election to the Board, bringing extensive industry experience, while Jennifer Banner will not seek re-election after a decade of service.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.