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LUMN

Lumen Technologies NYSE:LUMN Stock Report

Last Price

US$7.28

Market Cap

US$7.5b

7D

-10.5%

1Y

-42.6%

Updated

30 Sep, 2022

Data

Company Financials +
LUMN fundamental analysis
Snowflake Score
Valuation3/6
Future Growth0/6
Past Performance3/6
Financial Health2/6
Dividends4/6

LUMN Stock Overview

Lumen Technologies, Inc., a facilities-based technology and communications company, provides various integrated products and services under the Lumen, Quantum Fiber, and CenturyLink brands to business and residential customers in the United States and internationally.

Lumen Technologies, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Lumen Technologies
Historical stock prices
Current Share PriceUS$7.28
52 Week HighUS$14.50
52 Week LowUS$7.27
Beta0.97
1 Month Change-26.91%
3 Month Change-34.65%
1 Year Change-42.59%
3 Year Change-36.92%
5 Year Change-63.60%
Change since IPO-31.03%

Recent News & Updates

Sep 28

Lumen: Don't Panic On New CEO

Summary Lumen CEO, Jeff Storey, will retire in November, roiling the stock. The company is in the midst of divesting businesses for over $10 billion. The market fears the 13% dividend yield is at risk with a new CEO in charge. The stock trades at less than 5x EV/EBITDA, with plenty of cash to cover the annual dividend payments. The market hasn't helped, but Lumen Technologies (LUMN) falling below 8 is mostly related to panic over the surprise retirement of respected CEO Jeff Storey. The telecom business has struggled to gain any traction under his leadership, questioning any selling pressure on his departure. My investment thesis remains Bullish here, with likely capital returns ahead to boost the gains from a large 13.2% dividend yield. CEO Departure Jeff Storey joined Lumen with the acquisition of Level 3 Communications back in 2017. Mr. Storey was designated to become the CEO of then CenturyLink at the start of 2019 in what appeared a positive move. The former CEO ended up retiring early, and Storey took over the CEO position in May 2018, but the stock has been down the whole time. Data by YCharts The executive doesn't officially retire until November 7, when Kate Johnson takes over. An extended transition is usually a good sign the retirement isn't being pulled forward due to anything nefarious at the company or looming bad results. Ms. Johnson held key leadership roles across a variety of Fortune 100 companies, including the recent leadership role at Microsoft (MSFT). The lack of information on the new CEO while balanced with Storey not being able to really transform Lumen leaves a mixed picture, as new blood is potentially needed in the industry. Focus On Cash Flows The large 13%+ dividend payout is very attractive to investors, but the real focus has to always be on the cash flows and profits. A big part of the dip from strong resistance at $10 to the current price of $8 is entirely related to fears the new CEO will cut the dividend. FinViz At the Goldman Sachs 2022 Communacopia Conference, CFO Chris Stansbury had the following to say about capital allocation plans in the future: I do think the dividend is very important, right, to our investors today and that's a very clear input to the decision that gets made. But the key criteria that the board is using that Jeff and, I'm sure, Kate will use and I'm using is -- the goal is to drive long-term returns for the shareholders and what's the best way to do that. The executives appear to understand the dividend is important to shareholders, but most investors would probably prefer better total returns. The company clearly understands the last dividend cut cratered the stock, so any decision to cut the dividend again would require an extremely impressive opportunity to generate far better returns. The closing of the recent divestitures will have a significant impact on the capital allocations. Lumen forecasts $7 billion in net discretionary cash and the remaining portion of the $10 billion in deal value in assumed debt. The combined divestitures will impact revenues by ~$700 million in Q4'22 with an outsized $450 million EBITDA hit. Lumen '22 Divestitures Presentation The problem with these divestitures is that the reduction in the financials adds to the view of the business in constant decline. The ILEC business was an EBITDA machine, whether in terminal decline or not. The network provider only delivered $1.81 billion in adjusted EBITDA during Q2'22. The Q4 number dips to only ~$1.36 billion once excluding these divestiture estimates. Lumen states net debt of $29.4 billion ending Q2'22, but the below chart shows $28.1 billion in debt. The company has around $10.3 billion in variable interest debt subject to large LIBOR rate increases this year. With the Fed already hiking rates 3 percentage points this year and threatening more hikes, the telecom faces higher interest expenses. Lumen Q2'22 10-Q The big question is how the company handles the $7 billion in net cash from these divestitures. The amount is enough alone to cover the dividend payment for 7 years, but Lumen is likely to repay debt to lower interest expenses.

Sep 21

Lumen Technologies establishes new subsea fiber route between US and France

Lumen Technologies (NYSE:LUMN) established a new subsea fiber route between the U.S. and France as the company seeks to increase network capacity and diversity. LUMN is now investing in a fiber pair on Grace Hopper, a subsea cable system spearheaded by Google, between New York and Bude, Cornwall in the U.K. Data flows are the lifeblood of the U.S.- Europe trade and investment partnership, according to the U.S. Chamber of Commerce. Shares were trading +0.12% pre-market. Source: Press Release

Sep 13

Lumen hires new CEO as Jeff Storey retires

Kate Johnson has been appointed as president, CEO and a member of the board of directors at Lumen Technologies (NYSE:LUMN). Johnson will succeed Jeff Storey, who is retiring after a distinguished 40-year career within the telecommunication and technology industries. The transition date is expected to be Nov 7, 2022. Johnson is a seasoned tech executive with experience working across a variety of Fortune 100 companies, including Oracle (ORCL), General Electric (GE) and Microsoft (MSFT). Most recently, she led Microsoft U.S., with a remit for all of the company's sales, services, marketing and operations.

Sep 06

Better High Yield Telecom Buy: Lumen Technologies Or AT&T?

Summary Lumen Technologies and AT&T are two high yield telecommunications companies. Which one is a better buy at the moment? We compare LUMN and T side-by-side and offer our take. Both Lumen Technologies (LUMN) and AT&T (T) are telecommunications businesses that currently offer very attractive dividends yields of 10.2% and 6.5%, respectively. While LUMN offers a vastly superior current dividend yield, AT&T has an investment grade balance sheet, implying that it is lower risk. In this article, we will compare them side by side and offer our take on which one is a better buy. Lumen Technologies Vs. AT&T - Business Model LUMN operates two main business segments: Business and Mass Markets. Within these segments, it offers various telecommunications related services, such as cloud services, managed security services, intellectual property and data services information technology solutions, colocation and data center services, and unified communication and collaboration solutions. It is also investing aggressively in rapidly growing its Quantum Fiber business as it seeks to capitalize on the growing demand for fiber infrastructure services. LUMN highlights its edge computing services and significant quantum fiber growth runway as key competitive advantages for its business. However, these capabilities have as of yet to translate into generating strong overall topline growth for the company. Recently, LUMN has sold off several of its non-core businesses and assets in an effort to deleverage the balance sheet and streamline its capital expenditure budget in order to be able to maximize capital investments into its growthiest and best-positioned assets. Thus far, management has struggled to build a sustainable business model that is able to generate stable or even growing cash flows. However, organic revenue declines are decelerating, and management continues to believe that organic revenue growth is only a year or two away for the company. Meanwhile, AT&T operates a more broadly diversified telecommunications business as it offers wireless voice and data communications services, wireless computing devices, handsets, data cards, and carrying cases. It also offers similar services to LUMN, including security, cloud solutions, data, and outsourcing services. Its clients include individuals, small and mid-sized businesses, multinational corporations, and governments. AT&T also offers broadband fiber and legacy telephone services to residential customers. Also similar to LUMN, AT&T has recently made moves to streamline its business model and deleverage its balance sheet. It spun off its media assets along with a large pile of debt, and now is solely focused on its core telecommunications business. However, it is struggling to generate any sort of meaningful growth in this business while also having to pour a lot of money into it via capital expenditures. We rate this segment as a draw between LUMN and AT&T. While AT&T is slightly better diversified, both businesses face significant competition in their businesses and are struggling to generate high returns on invested capital, so ultimately neither has anything impressive to stand on. Lumen Technologies Vs. AT&T - Balance Sheet LUMN has a junk credit rating from S&P at BB, with a negative outlook. That said, it is making some strides to improve its balance sheet and it is not in any sort of near-term risk of financial distress. Year-to-date in 2022, it has reduced net debt by nearly $900 million, while generating substantial free cash flow. Furthermore, it continues to divest non-core assets, generating billions of dollars in proceeds that it is largely using to pay down debt. Between its impressive free cash flow generation, net proceeds from divestures, and well-laddered debt maturity calendar, LUMN should not have any issue meeting financial obligations for years to come. Meanwhile, AT&T has an investment grade BBB credit rating from S&P with a stable outlook. Furthermore, between the debt that it recently spun off along with its media assets and its meaningful retained free cash flow at the moment thanks to its recently slashed dividend, AT&T is able to continue paying down debt to further strengthen its balance sheet. As management said on its latest earnings call: Importantly, we maintained our focus on paying down debt, with the $40 billion in proceeds from the completion of the WarnerMedia Discovery transaction in April helping us to significantly reduce our net debt in the quarter. Overall, neither business is in trouble in this segment, but we give the win to AT&T given that it has an investment grade balance sheet and is more focused on reducing debt at the moment thanks to its lower dividend payout ratio. Lumen Technologies Vs. AT&T - Growth Potential This is an area where both businesses are currently struggling while also investing aggressively in an attempt to drive a turnaround. Both businesses have seen revenues and EBITDA decline since 2020 (LUMN also saw revenue decline in 2019, but its EBITDA edged up slightly that year), and analysts expect revenue to continue declining for both businesses in 2023, though AT&T is expected to see EBITDA increase slightly next year. LUMN, meanwhile, is not expected to see EBITDA return to growth until 2024 and revenue will likely be flattish in 2024 and then post solid growth beginning in 2025. While neither business has strong growth potential moving forward, we give AT&T the slight edge here as analysts have a rosier outlook for its business relative to LUMN's, and AT&T is also retaining more cash flow at the moment for reinvesting in growth. Lumen Technologies Vs. AT&T - Track Record When it comes to track record, neither business is particularly impressive in recent years. However, over the long term, LUMN and AT&T have posted similar results, with AT&T enjoying a slight edge: LUMN Total Return Price data by YCharts

Shareholder Returns

LUMNUS TelecomUS Market
7D-10.5%-3.9%-3.1%
1Y-42.6%-35.0%-21.5%

Return vs Industry: LUMN underperformed the US Telecom industry which returned -35% over the past year.

Return vs Market: LUMN underperformed the US Market which returned -21.5% over the past year.

Price Volatility

Is LUMN's price volatile compared to industry and market?
LUMN volatility
LUMN Average Weekly Movement5.2%
Telecom Industry Average Movement6.0%
Market Average Movement6.9%
10% most volatile stocks in US Market15.7%
10% least volatile stocks in US Market2.8%

Stable Share Price: LUMN is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: LUMN's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
196835,000Jeff Storeyhttps://www.lumen.com

Lumen Technologies, Inc., a facilities-based technology and communications company, provides various integrated products and services under the Lumen, Quantum Fiber, and CenturyLink brands to business and residential customers in the United States and internationally. The company operates in two segments, Business and Mass Markets. It offers compute and application services, such as cloud services, IT solutions, unified communication and collaboration solutions, colocation and data center services, content delivery services, and managed security services; and IP and data services, including VPN data network, Ethernet, internet protocol (IP), and voice over internet protocol.

Lumen Technologies, Inc. Fundamentals Summary

How do Lumen Technologies's earnings and revenue compare to its market cap?
LUMN fundamental statistics
Market CapUS$7.54b
Earnings (TTM)US$2.00b
Revenue (TTM)US$19.02b

3.8x

P/E Ratio

0.4x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
LUMN income statement (TTM)
RevenueUS$19.02b
Cost of RevenueUS$8.28b
Gross ProfitUS$10.74b
Other ExpensesUS$8.75b
EarningsUS$2.00b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.93
Gross Margin56.47%
Net Profit Margin10.49%
Debt/Equity Ratio227.4%

How did LUMN perform over the long term?

See historical performance and comparison

Dividends

13.7%

Current Dividend Yield

51%

Payout Ratio