Simple Concepts Research Group

How Are Investors Assessing Lumen Technologies (NYSE: LUMN)?

by | Feb 17, 2022 | 52 Week Lows, Stock Picks

lumen technologies lumn stock valuation

Lumen Technologies (LUMN) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Lumen Technologies (LUMN) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Lumen Technologies Fundamentals

LUMN Stock Rating

Stock Price Target: $16.72

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Lumen Technologies in comparison to the Telecom Services industry and the S&P 500.

Lumen Technologies is a Large Cap company with a Market Cap of $10.8B.

How are investors using Lumen Technologies earnings yield to assess the company?

Lumen Tech (LUMN)_ Earnings Yield in Comparison to the Telecom Services Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Lumen Technologies is 19.80%, in comparison to 3.97% for the S&P 500 and 1.92% for the 10-year treasury bond. The median earnings yield for the Telecom Services industry is 15.14%.

What does Lumen Technologies Price-to-Earnings Ratio (P/E) tell investors about the company?

Lumen Tech (LUMN)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Telecom Services Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Lumen Technologies is currently trading at a P/E of 5.26. The P/E for the Telecom Services industry is 13.47 and the P/E for the S&P 500 is 25.2.

What is the current Price-to-Sales Ratio (P/S) for Lumen Technologies?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Lumen Technologies is currently trading at a P/S of 0.54. The P/S for the Telecom Services industry is 1.27 and the P/S for the S&P 500 is 2.92.

How does Lumen Technologies Price-to-BookRatio (P/B) compare to the Telecom Services industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Lumen Technologies P/B ratio is not currently reported. The P/B for the Telecom Services industry is 1.53 and the P/B for the S&P 500 is 4.49.

How attractive is Lumen Technologies Return on Invested Capital (ROIC) to investors?

Lumen Tech (LUMN)_ Return on Invested Capital in Comparison to the Telecom Services Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Lumen Technologies ROIC is currently 5% in comparison to 7.45% for the Telecom Services industry and 9.10% for the S&P 500.

Lumen Tech (LUMN)_ Price Target & 52-Week Price Range

How has LUMN stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Lumen Technologies has traded between the range of $9.72 and $15.45.

The current Analyst Price Target for Lumen Technologies is $16.72.

What is Lumen Technologies YOY Performance in comparison to its industry and the total market?

The YOY performance for -15.73 is PERCENT%. The Telecom Services industry has a YOY performance of -9% in comparison to the YOY S&P 500 performance of 13.73%.

Lumen Tech (LUMN)_ YOY Performance in Comparison to the Telecom Services Industry and the S&P 500

Recent Financial Results (Q4, 2021)

  • Reported net income of $508M for the fourth quarter 2021, compared to reported Net Loss of $2.289B for the fourth quarter 2020, which included a non-cash impairment charge of $2.6B
  • Generated Adjusted EBITDA of $2.08B for the fourth quarter 2021, compared to $2.18B for the fourth quarter 2020, excluding Special Items of $19M and $105M
  • Reported net cash from Operating Activities of $1.6B for the fourth quarter 2021
  • Generated Free Cash Flow of $776M for the fourth quarter 2021, compared to $943M for the fourth quarter 2020, excluding cash paid for Special Items of $17M and $19M

Stock Price Target: $16.72

Company Overview

LUMN Stock Rating

Lumen Technologies is a facilities-based technology and communications company, provides various integrated services and solutions under CenturyLink name to business and residential customers in the United States and internationally. The company operates through five segments: International and Global Accounts Management, Enterprise, Small and Medium Business, Wholesale, and Consumer.

The company was formerly knowen as CenturyLink, Inc. and changed its name to Lumen Technologies, Inc. in September 2020. Lumen Technologies, Inc. was incorporated in 1968 and is headquartered in Monroe, Louisiana. The current CEO is Jeffrey Storey.

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This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.