Lumen Technologies (LUMN) AI Stock Analysis

• Market Cap: $3.85B
• Dividend Yield: N/A
• Average Volume (3M): 15.16M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.75
• Revenue Growth: -9.95%
• EPS Growth: 99.47%
• Country: US
• Employees: 25,000
• Sector: Communication Services
• Sector Strength: 98
• Industry: Telecommunications Services
• EPS (TTM): -0.06
• Shares Outstanding: 1,025,099,400
• 10 Day Avg. Volume: 17,839,845
• 30 Day Avg. Volume: 15,164,656
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.38
• Price to Cash Flow (P/CF): 1.80
• P/FCF Ratio: 0.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $4.31
• Price Target Upside: 21.75% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

Lumen Technologies' stock score reflects significant financial challenges with declining revenues and profitability issues, compounded by high leverage. Technical indicators suggest bearish momentum. Valuation metrics are unfavorable, with a negative P/E ratio and no dividend yield. However, strategic initiatives and improvements highlighted in the earnings call provide some optimism for future growth, although current financial health is weak.

Positive Factors

Earnings Potential

There is an expected share price return of 38.0% for Lumen Technologies Inc.

Mergers and Acquisitions

AT&T and possibly its JV partner Gigapower are seen as top bidders for Lumen's consumer fiber operations.

Potential Growth

Lumen is expected to benefit from four potentially positive catalysts including increased PCF sales, possible monetization of its fiber and mass market segment, company transformation to better integrate operations and reduce costs, and improving sales in the core business segment.

Negative Factors

Business Segment Challenges

Lumen needs to improve Business segment financials, which is likely to take time.

Financial Performance

The stock reacted negatively to the news because the valuation seemed low compared to previous reports.

Revenue Decline

The company faces persistent legacy revenue declines, high leverage, potentially disruptive transformation investments, and rising costs associated with PCF related network builds.

Lumen Technologies Business Overview & Revenue Model

Company Description

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. The company also provides fiber infrastructure services comprising high bandwidth optical wavelength networks; and unlit optical fiber and related professional services. In addition, it offers voice and other services, including private line services, a direct circuit or channel specifically dedicated for connecting two or more organizational sites; a portfolio of traditional time division multiplexing voice services; and synchronous optical network-based Ethernet, legacy data hosting services, and conferencing services. As of December 31, 2021, the company served approximately 4.5 million broadband subscribers. The company was formerly known as CenturyLink, Inc. and changed its name to Lumen Technologies, Inc. in September 2020. Lumen Technologies, Inc. was incorporated in 1968 and is headquartered in Monroe, Louisiana.

How the Company Makes Money

Lumen Technologies generates revenue through multiple streams, primarily from its business and mass markets segments. The business segment includes services such as network connectivity, hybrid IT solutions, cloud and managed services, and voice and collaboration tools, which are provided to enterprise customers, government agencies, and wholesale clients. The mass markets segment focuses on delivering broadband, voice, and other services to residential customers. Lumen benefits from strategic partnerships and collaborations with technology companies to enhance its service offerings. Additionally, the company capitalizes on its extensive fiber network and digital infrastructure to support data-intensive applications, which is a significant factor contributing to its earnings.

Lumen Technologies Financial Statement Overview

Summary

Lumen Technologies faces financial challenges with declining revenues and negative net income, indicating profitability issues. The balance sheet is heavily leveraged, posing risks if cash flow does not improve. While operating cash flow has shown some improvement, overall financial health remains precarious, necessitating strategic measures to enhance revenue and manage debt effectively.

Income Statement

Lumen Technologies has experienced a declining revenue trend over the past few years, with the latest annual revenue falling to $13.11 billion from $14.56 billion in the previous year. The company continues to face profitability challenges, as evidenced by the negative net income of -$55 million for the most recent year. Gross profit margin remains concerning, given the negative net income and the company's inability to maintain positive EBIT and EBITDA margins consistently.

Balance Sheet

The balance sheet shows a high level of debt relative to equity, with a debt-to-equity ratio of approximately 39.14, indicating significant leverage. The return on equity is negative due to the company's net losses, which is a red flag for investors. The equity ratio is low, suggesting that the company is heavily reliant on debt financing, which poses a risk if cash flows do not improve.

Cash Flow

The cash flow statement highlights some positive aspects, such as positive operating cash flow of $4.33 billion, which is an improvement from the previous year. However, the free cash flow growth is concerning, given the company's previous negative free cash flow of -$940 million. The operating cash flow to net income ratio is skewed due to the negative net income, indicating potential profitability issues.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
13.11B	14.56B	17.48B	19.69B	20.71B
	Gross Profit
13.11B	7.41B	9.61B	11.20B	11.78B
	EBIT
460.00M	-9.58B	3.54B	4.29B	3.53B
	EBITDA
4.10B	-6.09B	3.58B	8.52B	5.90B
	Net Income Common Stockholders
-55.00M	-10.30B	-1.55B	2.03B	-1.23B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.89B	2.23B	1.25B	354.00M	406.00M
	Total Assets
33.50B	34.02B	45.58B	57.99B	59.39B
	Total Debt
18.16B	20.26B	20.92B	29.37B	32.22B
	Net Debt
16.27B	18.02B	19.66B	29.01B	31.81B
	Total Liabilities
33.03B	33.60B	35.14B	46.15B	48.23B
	Stockholders Equity
464.00M	417.00M	10.44B	11.84B	11.16B
Cash Flow		Free Cash Flow
1.10B	-940.00M	1.72B	3.60B	2.79B
	Operating Cash Flow
4.33B	2.16B	4.74B	6.50B	6.52B
	Investing Cash Flow
-2.83B	-1.20B	5.48B	-2.71B	-3.56B
	Financing Cash Flow
-1.85B	-18.00M	-9.31B	-3.81B	-4.25B

Lumen Technologies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.54
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LUMN, the sentiment is Negative. The current price of 3.54 is below the 20-day moving average (MA) of 4.18, below the 50-day MA of 4.57, and below the 200-day MA of 5.23, indicating a bearish trend. The MACD of -0.26 indicates Positive momentum. The RSI at 30.60 is Neutral, neither overbought nor oversold. The STOCH value of 9.67 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LUMN.

Lumen Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TIGO	77 Outperform	$4.75B	18.68	7.13%	3.62%	2.53%	―
PHI	76 Outperform	$4.83B	8.54	29.05%	5.87%	-0.15%	17.96%
TKC	75 Outperform	$5.15B	11.96	6.76%	2.51%	8.78%	-21.85%
TDS	64 Neutral	$3.90B	―	-0.54%	0.44%	-3.80%	83.27%
TEO	63 Neutral	$5.66B	4.72	23.27%	―	-26.74%	―
Sector *	58 Neutral	$26.94B	3.15	-10.67%	4.32%	2.14%	-43.11%
LUMN	47 Neutral	$3.85B	―	-12.49%	―	-9.95%	99.47%

Lumen Technologies Corporate Events

Lumen Technologies Reports Financial Improvement in 2024

For the fourth quarter and full year 2024, Lumen Technologies reported a notable improvement in financial performance, with a net income of $85 million in Q4 2024 compared to a significant net loss in the same period in 2023. The company also strengthened its balance sheet by reducing debt, increasing liquidity, and enhancing customer satisfaction across all segments. Lumen continued to make strategic advancements in building an AI backbone and expanding its network-as-a-service offerings, setting a strong foundation for future growth. Despite the improvements, the company reported a full-year net loss of $55 million, a substantial recovery from the previous year’s loss, attributed mainly to non-cash goodwill impairment charges.