Getting Brighter: Lumen Technologies Q2 FY12/25 Earnings Review
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The Markup Zone
by Alex King, CEO, Cestrian Capital Research.
For a quick primer on Lumen Technologies, please take a look at our note from June this year, here.
Alex King
This is an old-line telco (remember US West or CenturyLink, anyone?) which has recently hired a very strong, focused CEO and is busy doing what telco really should focus on, namely moving electrons, photons and radio waves from point A to point B and not bothering to do any fancy stuff (said fancy stuff is usually being referred to as ‘moving up the value chain’ but somehow never seems to make any money).
The company printed its Q2 recently which was a positive catalyst for the stock. I will say that trying to divine meaning from the headline financials is a little tough at present because the company is in the process of selling its consumer fiber business to AT&T for $5.75bn in reported value. The company has the asset demarked on its balance sheet as for sale (note, the ‘assets held for sale’ value on the balance sheet is a $3.7bn value asset minus a $110m liability) but has not split out the revenue and earnings for the for-sale unit. In my experience trying to pro-forma for such disposals using only public data (ie. without sitting down with the CFO) is tricky and usually not worth bothering with. What we can say is that the infusion of value for the sale of the unit, and the increased management focus that come with it, is a boon for the company.
We rated the stock at ‘Accumulate’ on June 24 at $4.29; it closed today at $5.63, so a 30% gain in less than three months, not too shabby if you followed this one.
Let’s check in on the numbers, valuation and stock chart to see whether this stock can keep moving upwards or whether it is time to sell the news.