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David Klein  

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  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    No, only because we already know what this years D&A is and can model accordingly. I had 290m projected for Q2 and it came in at 288m. Although full year 2015 should come in at about $1,160. From here we can get an idea what the future holds. My analysis has this built in going forward.

    I'm working on an updated article but it takes me a little time to put everything together. Hopefully I'll submit something this week, next week at the latest.
    Aug 4, 2015. 02:16 PM | Likes Like |Link to Comment
  • Put Evolving Systems On Your Radar [View article]
    I've followed this stock over the years after it was brought to my attention by SeattleGoldMiner. That said I do not own the stock but agree there is room for growth while the dividend provides support on the downside. I just ran my "lack of" in depth analysis and see a possible FV of $11.10. All this assumes a healthy long term growth rate for FCF and EPS going forward.

    TTM income growth from operations before income taxes (based on management reporting) has gone from negative a year ago to extremely positive over the last 3 quarters up to 1Q15. I have been disappointed with FCF through 2014 but 1Q15 showed a very strong uptick. Whether this is an anomaly or trend is to be seen.

    I have done some tracking vs what I would call an in depth analysis so take my opinions (or FV) with a grain of salt. I have kept track of some metrics by quarter to graph progress or lack thereof. If anyone wants it (A simple Excel spreadsheet) just send me an email and I'll send you a copy. No analysis just historical data tracking.

    Before being asked why I do not own the stock, my answer is I'm very conservative and require a large discount to FV plus I have other another stock I think has more potential but I would be a buyer here in any correction that gives me the MOS I seek.
    Jul 17, 2015. 11:43 AM | Likes Like |Link to Comment
  • IIEX 2Q-2015 Newsletter [View instapost]
    I should note the S&P earnings growth trend is 7%. If I were to over-ride the trend and use say 5% earnings growth going forward the S&P growth from Fridays close would look like:

    5 Year: CAGR range (0.9%) to 3.4%; midpoint 1.4%

    10 Year: CAGR range 2.0% to 4.2%; midpoint 3.2%
    Jun 28, 2015. 02:23 PM | Likes Like |Link to Comment
  • Level 3 Communications: The Hidden Story [View article]
    This article was picked for the SA's weekly "Outstanding Performance Award". The Performance Award Case Study is at: http://seekingalpha.co...
    Jun 16, 2015. 03:23 PM | Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    This week's SA Award winners:long idea on Level 3 (LVLT) @ http://bit.ly/1IghYBd
    Jun 15, 2015. 03:59 PM | Likes Like |Link to Comment
  • Level 3 Communications: The Hidden Story [View article]
    LVLT is up over 100% since this article was published; the first article since I made LVLT the focus stock on my website. In response I’ll try to summarize my latest thinking in this comment. First congrats to anyone who took the advice in the article and used the remainder of 2013 to accumulate the stock.

    Although the article called this “The Hidden Story” it’s not as well hidden today from the general investment community but it’s still relatively unknown to many. I’ve noticed a few other positive articles recently on SA and a few other publications however this story is still unfolding, i.e., still in the early stages. My more recent article lays out a more complete picture. (http://seekingalpha.co... )

    CNS Wholesale revenue has been declining (as expected) but may be at an inflection point and starting to flatten out and possibly show slight growth in the near future. The largest segment (Enterprise) will continue to become a larger slice of the pie overtime and push gross margins higher. Level 3 has scale, i.e., they can grow revenue with minimal increases in operating costs (e.g., administrative, sales, etc.). The growth that flows through to free cash flow, EBITDA and earnings is substantial.

    Fair value is estimated at $73 as of this writing. Fair value is reflected in an interactive model publically available at: http://bit.ly/1kOXwAE
    where you can change various rates for revenue growth, Capex etc., which adjusts fair value. I think the CNS revenue growth rates are easily achievable and think the potential is there to exceed these single digit rates. Finally I’ll repeat this idea is a multiyear investment horizon not a short-term trade and I believe this investment will continue to reward investors with large returns over the next several years based on yesterdays close.
    Jun 11, 2015. 09:45 AM | 1 Like Like |Link to Comment
  • Netflix: No Thanks - We'll Have Level 3 Instead [View article]
    Very nice article and it's no surprise to some I agree with the potential for LVLT. My own research projects 2019 EPS at $5.77+- based on single digit top line growth (which is in line with your comment "Therefore, the upside would be much higher.") although I hope I'm wrong when it comes to only single digit top line growth. If the market ever thought they might hit double digit revenue growth the stock would take off although results and management still point to single digit CNS revenue growth.

    At this point I think the downside has more to do with the market than LVLT, i.e., LVLT could take a large hit in any correction since it pays no dividend and has a high debt load although any hit not related to the fundamentals would be an opportunity IMO.

    That said I am very long LVLT at this point.
    Jun 10, 2015. 01:08 PM | 6 Likes Like |Link to Comment
  • Is Eastman Chemical Close To A Long-Term Buy? [View article]
    Hi Maddogbucko, the company separated from Kodak 21 years ago. They are two different (independent) companies so I would say the pensions for each company are unrelated. That said I'm not in the legal profession so you may want to contact a lawyer to see if you have any redress.
    Jun 8, 2015. 08:45 AM | 1 Like Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    Sunit Patel, executive vice president and chief financial officer said today at the Jefferies 2015 Global Technology, Media and Telecom Conference that LVLT could start returning $ to shareholders next year if they don't see opportunities for high return on investment. He did not say in what form; buybacks, dividends (or I missed it), although I believe a large part of the 2016 FCF could go to servicing debt. Of course all this assumes high return investment opportunities do not use the cash instead.

    - Webcast accessed from: http://bit.ly/1ctlRu0
    May 12, 2015. 12:55 PM | Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    The updated income statement is posted
    May 11, 2015. 10:05 AM | Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    Hi professor, no it is not. The formula summed all four quarters when it should have averaged them. Thanks for catching that, I'll try and get SA to change it. My current diluted share count based on the recently filed 10-Q is 372m. The average count used for year end 2015 is 374.
    2015 2016 2017 2018 2019
    Basic 349 356 363 370 377
    Diluted 374 378 382 386 390

    I've updated the model since the article (increase in debt extinguishment) so some EPS numbers will be modified but not enough to change projected numbers, assuming I can upload the new table.
    May 10, 2015. 04:00 PM | Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    Thank you Rubbergutz.
    May 7, 2015. 10:16 AM | Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    Hi Ted and thanks for commenting. Another way to look at it is EPS CAGR from 2015-2019 is over 40% which should generate a very high PE. If I applied a modest PE (say) 18 to 2019 EPS then discounted this back to today using a discount rate of say 8% would produce an attractive FV.

    FCF CAGR is over 34% over the same period although not said in the article will eventually see the company start returning cash to shareholders sometime over this period; could be buybacks or dividends or both which adds to the attraction. I believe management has actually started to mention this as a possibility just did not put a time frame on it.

    That said I'm not saying you are wrong and I'm right, after all differing views is what makes the market. Fact is I don't know who will turn out to be right longer term which is why I update my analysis every quarter. This is just another view but the picture continues to improve based on my analysis over periods at the end of the article.

    I will note that LVLT could take a large hit in any correction since it pays no dividend and has a high debt load although any hit not related to the fundamentals would be an opportunity IMO.

    We'll see what future quarters hold.
    May 5, 2015. 12:32 PM | Likes Like |Link to Comment
  • Has Revenue Growth Stalled At Level 3 Communications? [View article]
    Thank you GRADPKS. Does is the PKS in your handle stand for Kiewit?
    May 5, 2015. 10:40 AM | Likes Like |Link to Comment
  • Is Eastman Chemical Close To A Long-Term Buy? [View article]
    Thank you, the kind words are appreciated.
    Apr 10, 2015. 04:25 PM | Likes Like |Link to Comment
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