Profile and Estimates
CenturyLink has a market cap of $22.83 billion and currently trades for $37.14 per share. Shares are down 3.61% YTD but trade 17.67% above their 52-week low of $31.56. Analysts have a mean target price of $37.03 and a median price target of $37.50 on the shares. Sixteen analysts have an average first quarter earnings per share estimate of $0.69 on estimated revenues of $4.51 billion. CenturyLink has topped earnings estimates in three of the last four quarters.
Fundamentals and Highlights (Sources cited below article)
- 5.8% dividend yield (see Mixed section for more on dividend)
- Positive acquisition history, especially when considering the purchases of Qwest and Savvis.
- Large exposure to rural, less competitive locals, helps deliver more stabilize cashflows.
- P/E of 29.7 and P/B of 1.2 are both below the industry average 43.1 and 1.9 respectively.
- Operating margins of 14.8% and net margins of 4.2% are both above the industry average 11.7% and 3.5% respectively.
- Wireless continues to pressure fixed-line services and CenturyLink has been slowly losing phone line customers.
- High cost network upgrades are required to continue to compete with larger companies like Verizon and AT&T, in addition to simply keeping up with the times.
- ROA of 1.4 and ROE of 3.9 are both below the industry average 1.8 and 5.3 respectively.
- D/E of 1.0 is above the industry averages 0.8.
- Recently, the company cut its dividend from a quarterly payment of $0.725 per share to $0.54. While this usually is done in order to preserve capital, the company did so in this instance to fund a 2-year $2 billion share repurchase program.
- Company is focused on keeping in-check debt but has indicated that it is willing to take on leverage at 3.0 times EBITDA.
Short interest has peaked when reported last on 4/15/13 which indicates that may are betting on a pullback or headwinds in the near future. Negative sentiment towards the company is high but even so, EPS are expected to be higher than any of the previous four quarters. I expect high volatility in the near future but see buybacks neutralizing margin pressures to a large degree, and even more so if management can time them at or around 52 week lows. Keep an eye out for earnings on Wednesday!
In addition to the links above, ratios and financial data was sourced from Morningstar.com, which you can find here.
Other company data was sourced from the annual report that can be accessed here.