Lumen Is Priced As If Imminently Obsolete Despite Only Modest Declines And Maintained Profits

Mar. 16, 2022 4:19 PM ETLumen Technologies, Inc. (LUMN)51 Comments

Summary

  • We were very Europe-focused in 2021, and we've profited massively from that with Dassault, and now we've rotated that money into a geography distant from war.
  • Lumen has traded down firstly because of markets being disappointed by continued top line declines and then due to the Ukraine invasion and related inflation concerns.
  • We were never investing in Lumen for growth, even though the Quantum Fiber rollout could provide it in three years or so, given no supply chain constraints slow it down.
  • Lumen's earnings yield is 20% now, and the business is certainly not terminal enough to worry about its profitability on a 5-year horizon.
  • Our original thesis still stands, and the asset sales proves a higher valuation on private markets. We have tripled up at just below $10 for the 10% yield.
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Fiber optic

Vertigo3d/E+ via Getty Images

It's been a while since we've covered Lumen (NYSE:NYSE:LUMN). It has been a marginal part of the portfolio, as new funds have been funneled for all of 2021 into our biggest holdings, all in Europe, including Dassault Aviation (

lumen mass market growth

Mass Market Segment (Q4 2021 LUMN Pres)

enterprise segment growth

Enterprise Segment (Q4 2021 LUMN Pres)

lumen outlook

Business Outlook (Q4 2021 LUMN Pres)

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This article was written by

Author of The Value Lab
A long-only voice with eclipsing growth through 2020 and 2022 bear markets.

Valkyrie Trading Society seeks to provide a consistent and honest voice through this blog and our Marketplace Service, the Value Lab, with a focus on high conviction and obscure developed market ideas.

DISCLOSURE: All of our articles and communications, including on the Value Lab, are only opinions and should not be treated as investment advice. We are not investment advisors. Consult an investment professional and take care to do your own due diligence.

DISCLOSURE: Some of Valkyrie's former and/or current members also have contributed individually or through shared accounts on Seeking Alpha. Currently: Guney Kaya contributes on his own now, and members have contributed on Mare Evidence Lab.

Disclosure: I/we have a beneficial long position in the shares of LUMN, DUAVF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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