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LUMN

Lumen Technologies NYSE:LUMN Stock Report

Last Price

US$7.28

Market Cap

US$8.3b

7D

-6.9%

1Y

-43.1%

Updated

05 Oct, 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-26.09%
3 Month Change-33.52%
1 Year Change-43.08%
3 Year Change-36.25%
5 Year Change-64.09%
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

Shareholder Returns

LUMNUS TelecomUS Market
7D-6.9%3.0%4.4%
1Y-43.1%-33.2%-18.2%

Return vs Industry: LUMN underperformed the US Telecom industry which returned -33.2% over the past year.

Return vs Market: LUMN underperformed the US Market which returned -18.2% over the past year.

Price Volatility

Is LUMN's price volatile compared to industry and market?
LUMN volatility
LUMN Average Weekly Movement5.7%
Telecom Industry Average Movement5.8%
Market Average Movement6.9%
10% most volatile stocks in US Market15.5%
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 +/- 6% a week.

Volatility Over Time: LUMN's weekly volatility (6%) 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$8.32b
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