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Lumen Cash Flow Analysis

Sep. 17, 2020 11:48 AM ETAT&T Inc. (T)LUMN31 Comments
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  • The confusion of investors that do not understand the Gap between Accounting and GAAP is clear from comments made in SA Articles.
  • Recently I was asked to opine on what would change my view on Lumen from a Strong Buy.
  • I've put together a rather simple spreadsheet that explains the underlying financial performance of Lumen which is critical to my investment thesis.
  • Lumen will have approximately $2B in non-cash expense on the GAAP Income Statement that is reversed out in the Operating Cash Flow.
  • Trading at roughly 30% cash flow, after roughly 18% of revenue in CAPEX, the financial situation is clearly misunderstood by Investors.

I'm going to keep this simple though you might need a wide screen to view the comparable cash flow analysis results.  Comparable cash flow is simply adjusting for significant changes on the balance sheet.  Think of comparable cash flow as the underlying cash generated by operations of the company, all else being equal.

I wrote this simple blog to respond to a question of what it would have to happen for me to change my "rating" of the investment opportunity in Lumen.  First and foremost, I would have to see a declining trend in comparable cash flow.  Yes, I have spreadsheets for this company out the wazoo!

Lumen remains my largest holding and if the market sells off I have ample dry powder to continue to lower my costs basis.  For now, I'll leave it at that.

Lumen Comparable Cash Flow

Analyst's Disclosure: I am/we are long CTL.

These are my opinions based on my analysis.

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