![]() In 3Q-22, the implied free cash flow pay-out ratio was 42%. Lumen's operations generated $620 million in free cash flow in the September quarter, more than enough to cover the $260 million it costs the company to pay its dividend each quarter. Quantum Fiber Subscriber Trends (Lumen Technologies) 3Q-22 Free Cash Flow, Updated Forecast And Dividend Cut Lumen increased its fiber broadband sales by 18% YoY in the third quarter, and its subscribers increased by 14% YoY to 813K. While the overall telecommunications industry is struggling to grow, Lumen's ability to steadily grow its subscriber base gives reason for optimism. Lumen also recently completed some significant business transactions, totaling approximately $10 billion in gross proceeds. To be honest, the only place I see Lumen making money in the future is in the fiber broadband business. Lumen generated robust profits in the third quarter on an adjusted EBITDA basis, with total EBITDA totaling $1.66 billion, an 11% decrease YoY. Lumen's sales have been declining for some time, particularly in the mass market segment, as market penetration is high and incremental buyers are becoming increasingly difficult to find. Lumen generated $4.32 billion in adjusted sales in 3Q-22, 5% less than the previous year. Lumen operates in a mature and saturated market, which means that market expansion is slow or non-existent. Ongoing Decline In Sales, But Fiber Is Giving Hope ![]() I believe the stock will remain appealing in the long run, but with the dividend cut, LUMN is little more than a Hold right now. The news caused significant turbulence for Lumen's stock price, which fell 17% on Wednesday in response to the dividend cut. The company also increased its free cash flow forecast from $2.0-2.2 billion to $2.2-2.4 billion, but decided to replace its dividend with stock repurchases in the future. ( NYSE: LUMN) announced its third quarter earnings presentation on Wednesday, shocking investors by canceling its dividend payment. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.Lumen Technologies, Inc. Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The 10 stocks that made the cut could produce monster returns in the coming years. and Lumen Technologies wasn't one of them. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now. ![]() Should you invest $1,000 in Lumen Technologies right now?īefore you buy stock in Lumen Technologies, consider this: But investors should approach the stock with the understanding that the bankruptcy risk for Lumen is still on the table. If the business can stabilize and demonstrate that it can make progress on paying down its debt load, shares could skyrocket from current levels. Lumen trades at approximately 38x the average analyst estimate for next year's expected profits. On the other hand, earnings are broadly expected to slip next year. The company is currently valued at roughly 18x this year's expected earnings. Trading at roughly 12% of this year's expected sales, Lumen stock looks quite cheaply valued for a company that's still posting meaningful profits on a non-GAAP (adjusted) basis. Massive sell-offs have pushed the company's valuation down to levels that look dirt cheap by some metrics, but the situation is complicated. Lumen's share price also trades down 96.5% from its lifetime high. The company's stock has lost roughly 67% of its value year to date. ![]() Lumen stock is beaten down and still risky News that key creditors are amenable to pushing the deadline for the company's debt restructuring further out reduces the risk of an eventual default or bankruptcy. At the same time, Lumen is also aiming to invest in potential growth drivers including fiber communications, edge computing, and security services.īy pushing the due dates for its loan payments further out, the company can potentially put itself in a better position to meet debt obligations while still investing in opportunities that could help get the business back on track. Interest rates remain high, and the company's heavy debt load is creating substantial interest-related expenses. Meanwhile, the company closed out today's trading with a market capitalization of $1.75 billion. Lumen carries roughly $19.7 billion in debt on its books. Why is Lumen's debt restructuring important?
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