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CenturyLink, Inc. (NYSE:CTL), incorporated in 1968, operates as an integrated telecommunications company in the United States. It is primarily engaged in providing a host of services to its business, residential, wholesale and government customers. It operates in four segments: Regional markets, Business markets, wholesale markets and Savvis operations. In April of 2011 and in July 2011, it acquired all the outstanding shares in Quest and Savvis Inc.

Reasons to be bullish on CenturyLink Inc (CTL)

  • A good yield of 7.3%
  • A strong levered free cash flow of $2.85 billion
  • EBITDA increased from $2.15 billion in 2009 to $6.04 billion in 2011
  • Cash flow per share increased from $5.70 in 2009 to $8.43 in 2011
  • A strong five-year sales growth rate of 46%
  • Sales surged from $4.9 billion in 2009 to $15.3 billion in 2011
  • A five-year dividend growth rate of 72%
  • A very strong quarterly revenue growth rate of 171%
  • Operating margins of 15%
  • Year over year projected growth rate of 12% for 2012
  • Decent total three year return of 57%
  • A five-year dividend average yield of 6.11%
  • A great free cash flow yield of 9.25%
  • $100K invested for 10 years would have grown to $175K; if the dividends were reinvested the rate of return would be much higher

Some worrisome factors:

  • Net income has dropped from $647 million in 2009 to $543 million in 2011
  • Annual EPS before NRI has also decreased from $3.60in 2009 to $2.21 in 2011
  • It has a high payout ratio of 103%

Suggested strategy for CenturyLink Inc

It has fairly strong resistance at 40 and good support at 36. We would wait for a pullback to the 36 ranges before opening up new positions. As stocks have a tendency to overshoot (to the upside and downside) the ideal strategy would entail selling puts with strikes in the 33-34 ranges when it tests 36. If you are assigned the shares, you will get in at a great price (strike price minus the premium you were paid). If you are not assigned the shares, you get to keep the premium which you can apply toward your purchase price. For those who are not familiar with the concept of selling puts; this article will give you a primer on the subject - A Naked Put Strategy For Denbury Resources.

Company: CenturyLink Inc

Levered Free Cash Flow = $2.82B

Basic Key ratios

  1. Relative Strength 52 weeks = 57
  2. Cash Flow 5 -year Average = 7.02

Growth

  1. Net Income ($mil) 12/2011 = 573
  2. Net Income ($mil) 12/2010 = 948
  3. Net Income ($mil) 12/2009 = 647
  1. EBITDA ($mil) 12/2011 = 6046
  2. EBITDA ($mil) 12/2010 = 3509
  3. EBITDA ($mil) 12/2009 = 2155
  1. Cash Flow ($/share) 12/2011 = 8.43
  2. Cash Flow ($/share) 12/2010 = 8.12
  3. Cash Flow ($/share) 12/2009 = 5.7
  1. Sales ($mil) 12/2011 = 15351
  2. Sales ($mil) 12/2010 = 7042
  3. Sales ($mil) 12/2009 = 4974
  1. Annual EPS before NRI 12/2009 = 3.6
  2. Annual EPS before NRI 12/2010 = 3.39
  3. Annual EPS before NRI 12/2011 = 2.21

Dividend history

  1. Dividend Yield = 7.3
  2. Dividend Yield 5 Year Average 12/2011 = 6.11
  3. Dividend 5 year Growth 12/2011 = 72.26

Dividend sustainability

  1. Payout Ratio = 1.27
  2. Payout Ratio 5 Year Average = 0.68
  3. Change in Payout Ratio = 0.59

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 4.09
  2. EPS Growth Quarterly(1)/Q(-3) = 127.63
  3. ROE 5 Year Average 12/2011 = 10.29
  1. Current Ratio 06/2011 = 0.88
  2. Current Ratio 5 Year Average = 0.76
  3. Quick Ratio = 0.88
  4. Cash Ratio = 0.38
  5. Interest Coverage Quarterly = 1.9

Other interesting companies

For investors looking for other investment ideas, detailed data has been provided on four additional companies. Additionally, investors can draw some ideas from our latest article, General Electric Among 2 Attractive Dividend And 3 Growth Plays to Consider.

Company: Emerson Electric Company (NYSE:EMR)

Basic Key ratios

  1. Percentage Held by Insiders = 0.85
  2. Relative Strength 52 weeks = 52
  3. Dividend 5-year Growth = 6.88
  4. Cash Flow 5 -year Average = 3.64
  5. Dividend Yield 5-Year Average = 2.88

Growth

  1. Net Income ($mil) 12/2011 = 2480
  2. Net Income ($mil) 12/2010 = 2164
  3. Net Income ($mil) 12/2009 = 1724
  1. EBITDA ($mil) 12/2011 = 4721
  2. EBITDA ($mil) 12/2010 = 3956
  3. EBITDA ($mil) 12/2009 = 3397
  1. Cash Flow ($/share) 12/2011 = 4.46
  2. Cash Flow ($/share) 12/2010 = 3.8
  3. Cash Flow ($/share) 12/2009 = 3.26
  1. Sales ($mil) 12/2011 = 24222
  2. Sales ($mil) 12/2010 = 21039
  3. Sales ($mil) 12/2009 = 20915
  1. Annual EPS before NRI 12/2007 = 2.66
  2. Annual EPS before NRI 12/2008 = 3.11
  3. Annual EPS before NRI 12/2009 = 2.27
  4. Annual EPS before NRI 12/2010 = 2.69
  5. Annual EPS before NRI 12/2011 = 3.24

Dividend history

  1. Dividend Yield = 3.3
  2. Dividend Yield 5 Year Average 12/2011 = 2.88
  3. Dividend 5 year Growth 12/2011 = 6.88

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.51
  2. Payout Ratio 5 Year Average 12/2011 = 0.47

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 11.16
  2. EPS Growth Quarterly(1)/Q(-3) = -101.37
  3. 5 Year History EPS Growth 12/2011 = 2.01
  4. 5 Year History EPS Growth 09/2011 = 2.01
  5. ROE 5 Year Average 12/2011 = 23.37
  1. Current Ratio 12/2011 = 1.38
  2. Current Ratio 5 Year Average = 1.43
  3. Quick Ratio = 1.12
  4. Cash Ratio = 0.42
  5. Interest Coverage Quarterly = 15.03

Company: American Express Co (NYSE:AXP)

Basic Key ratios

  1. Percentage Held by Insiders = 1.48
  2. Number of Institutional Sellers 12 Weeks = 3
  3. Relative Strength 52 weeks = 85
  4. Dividend 5-year Growth = 2.84
  5. Cash Flow 5 -year Average = 3.54
  6. Dividend Yield 5-Year Average = 1.9

Growth

  1. Net Income ($mil) 12/2011 = 4935
  2. Net Income ($mil) 12/2010 = 4057
  3. Net Income ($mil) 12/2009 = 2130
  1. EBITDA ($mil) 12/2011 = 10194
  2. EBITDA ($mil) 12/2010 = 9304
  3. EBITDA ($mil) 12/2009 = 6118
  4. Cash Flow ($/share) 12/2011 = 4.99
  5. Cash Flow ($/share) 12/2010 = 4.15
  6. Cash Flow ($/share) 12/2009 = 2.42
  1. Sales ($mil) 12/2011 = 28850
  2. Sales ($mil) 12/2010 = 27819
  3. Sales ($mil) 12/2009 = 24523
  1. Annual EPS before NRI 12/2007 = 3.43
  2. Annual EPS before NRI 12/2008 = 2.42
  3. Annual EPS before NRI 12/2009 = 1.54
  4. Annual EPS before NRI 12/2010 = 3.41
  5. Annual EPS before NRI 12/2011 = 4.12

Dividend history

  1. Dividend Yield = 1.35
  2. Dividend Yield 5 Year Average 12/2011 = 1.9
  3. Dividend 5 year Growth 12/2011 = 2.84

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.17
  2. Payout Ratio 5 Year Average 12/2011 = 0.28

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 11.57
  2. EPS Growth Quarterly(1)/Q(-3) = -110.31
  3. 5 Year History EPS Growth 12/2011 = 6.42
  4. ROE 5 Year Average 12/2011 = 25.99
  1. Current Ratio 12/2011 = 1.22
  2. Current Ratio 5 Year Average = 1.68
  3. Quick Ratio = 1.21
  4. Cash Ratio = 0.44
  5. Interest Coverage Quarterly = 4.09

Company: Anadarko Petrol (NYSE:APC)

Growth

  1. Net Income ($mil) 12/2011 = -2649
  2. Net Income ($mil) 12/2010 = 761
  3. Net Income ($mil) 12/2009 = -135
  1. EBITDA ($mil) 12/2011 = 1245
  2. EBITDA ($mil) 12/2010 = 6210
  3. EBITDA ($mil) 12/2009 = 4126
  4. Cash Flow ($/share) 12/2011 = 11.07
  5. Cash Flow ($/share) 12/2010 = 9.32
  6. Cash Flow ($/share) 12/2009 = 6.25
  1. Sales ($mil) 12/2011 = 13967
  2. Sales ($mil) 12/2010 = 10984
  3. Sales ($mil) 12/2009 = 9000
  1. Annual EPS before NRI 12/2009 = -0.96
  2. Annual EPS before NRI 12/2010 = 1.81
  3. Annual EPS before NRI 12/2011 = 3.38

Dividend history

  1. Dividend Yield = 0.50
  2. Dividend Yield 5 Year Average 12/2011 = 0.63
  3. Forward Yield = 0.49
  4. Dividend 5 year Growth 12/2011 = 0

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.11
  2. Payout Ratio 5 Year Average 12/2011 = 0.2
  3. Change in Payout Ratio = -0.1

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 27.15
  2. EPS Growth Quarterly(1)/Q(-3) = -126.03
  3. 5 Year History EPS Growth 12/2011 = N/A
  4. ROE 5 Year Average 12/2011 = 6.93
  5. Current Ratio 06/2011 = 1.42
  6. Current Ratio 5 Year Average = 1.25
  7. Quick Ratio = 1.42
  8. Cash Ratio = 0.75
  9. Interest Coverage Quarterly = N/A

Company: IBM (NYSE:IBM)

Basic Key ratios

  1. Percentage Held by Insiders = 0.09
  2. Number of Institutional Sellers 12 Weeks = 10
  3. Relative Strength 52 weeks = 82
  4. Dividend 5-year Growth = 15.75
  5. Cash Flow 5 -year Average = 13.41
  6. Dividend Yield 5-Year Average = 1.73

Growth

  1. Net Income ($mil) 12/2011 = 15855
  2. Net Income ($mil) 12/2010 = 14833
  3. Net Income ($mil) 12/2009 = 13425
  1. EBITDA ($mil) 12/2011 = 26229
  2. EBITDA ($mil) 12/2010 = 24922
  3. EBITDA ($mil) 12/2009 = 23534
  4. Cash Flow ($/share) 12/2011 = 17.82
  5. Cash Flow ($/share) 12/2010 = 15.83
  6. Cash Flow ($/share) 12/2009 = 14.02
  1. Sales ($mil) 12/2011 = 106916
  2. Sales ($mil) 12/2010 = 99870
  3. Sales ($mil) 12/2009 = 95758
  1. Annual EPS before NRI 12/2007 = 7.13
  2. Annual EPS before NRI 12/2008 = 8.93
  3. Annual EPS before NRI 12/2009 = 10.01
  4. Annual EPS before NRI 12/2010 = 11.52
  5. Annual EPS before NRI 12/2011 = 13.38

Dividend history

  1. Dividend Yield = 1.7
  2. Dividend Yield 5 Year Average 12/2011 = 1.73
  3. Dividend 5 year Growth 12/2011 = 15.75

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.22
  2. Payout Ratio 5 Year Average 12/2011 = 0.23

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 10.05
  2. EPS Growth Quarterly(1)/Q(-3) = -120.35
  3. 5 Year History EPS Growth 12/2011 = 16.74
  4. ROE 5 Year Average 12/2011 = 60.88
  1. Current Ratio 12/2011 = 1.28
  2. Current Ratio 5 Year Average = 1.18
  3. Quick Ratio = 1.15
  4. Cash Ratio = 1.11
  5. Interest Coverage Quarterly = 35.87

The markets are still in a corrective phase and will most likely remain volatile for the better part of the second quarter. Long-term investors can use strong pullbacks to slowly start deploying money into long-term investments. One of the best ways to do this is by selling naked puts at strikes you would not mind owning the stock at.

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware.

Source: CenturyLink: To Buy Or Not To Buy

Additional disclosure: EPS and Price vs. industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Data for Y charts sourced from ycharts.com. Consensus estimate analysis table sourced from reuters.com.