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CenturyLink (CTL) Lags Q4 Earnings and Revenue Estimates
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CenturyLink Inc. reported weak financial results in the fourth quarter of 2016, wherein both the bottom line and top line fell short of the Zacks Consensus Estimate.
CenturyLink posted adjusted earnings per share of 54 cents, lagging the Zacks Consensus Estimate of 56 cents. GAAP net income was $42 million or 8 cents per share compared with $338 million or 62 cents in the prior-year quarter.
Quarterly total revenue of $4,289 million was down 4.2% from the prior-year quarter and below the Zacks Consensus Estimate of $4,330 million. Of the total, Strategic revenues totaled $2,016 million, up 1.2% year over year. Legacy revenues accounted for $1,846 million, down 9.3%. Data Integration revenues grossed $131 million, down 6.4%. Other services contributed the remaining $296 million, down 3.9%.
Quarterly operating expenses totaled $3,897 million, up 4.6% year over year. Meanwhile, operating income was $392 million compared with $751 million in the year-ago quarter.
Cash Flow
In the fourth quarter of 2016, CenturyLink generated $1,588 million of adjusted cash from operations compared with $1,819 million in the year-ago quarter. Adjusted free cash flow, in the reported quarter, was $190 million compared with $601 million in the year-ago quarter.
Liquidity
CenturyLink exited 2016 with $222 million of cash and cash equivalents compared with $126 million at the end of 2015. At 2016 end, total debt was $19,688 million compared with $20,225 million at the end of 2015. Meanwhile, the debt-to-capitalization ratio was 0.58, in line with the figure reported at the end of 2015.
Segmental Results
Business segment revenues dropped 4.1% year over year to $2,545 million in the fourth quarter. Segmental profits were $1,073 million, down 9.3% year over year. Segmental profit margin was 42.2% compared with 44.6% in the year-ago quarter.
Consumer segment revenues were $1,448 million, down 4.3% year over year. Segmental profits were $820 million, down 8.9% year over year. Segmental profit margin was 56.6% compared with 59.5% in the year-ago quarter.
Subscriber Statistics
As of Dec 31, 2016, total access lines were 11.090 million, down 5.6% year over year. High-speed broadband customer count was 5.945 million, down 1.7% and Prism TV customer base totaled 0.325 million, up 14%. In the reported quarter, CenturyLink lost 5,000 high-speed broadband subscribers and 141,000 access lines but gained 7,000 Prism TV subscribers.
Q1 2017 Outlook
For the first quarter of 2017, the company projects adjusted earnings per share and operating revenues in the range of 51 cents to 57 cents and $4.23 billion to $4.29 billion, respectively. Core revenues are estimated in the range of $3.80 billion to $3.86 billion. Operating cash flow is projected between $1.49 billion and $1.55 billion.
2017 Guidance
For 2017, the company projects adjusted earnings per share and operating revenues in the range of $2.10 to $2.30 and $17.05 billion to $17.30 billion, respectively. Core revenues are estimated in the range of $15.25 billion to $15.50 billion. Operating cash flow is projected between $6.15 billion and $6.35 billion. Capital expenditure will be around $2.6 billion.
Recent Development
On Oct 31, 2016, CenturyLink has agreed to purchase Level 3 Communications Inc. for $24 billion. The cash and stock deal is expected to close by the end of third quarter of 2017. The merged entity will be able to compete with the likes of telecom giants like AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) in the communications industry. CenturyLink currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CenturyLink, Inc. Price, Consensus and EPS Surprise
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CenturyLink (CTL) Lags Q4 Earnings and Revenue Estimates
CenturyLink Inc. reported weak financial results in the fourth quarter of 2016, wherein both the bottom line and top line fell short of the Zacks Consensus Estimate.
CenturyLink posted adjusted earnings per share of 54 cents, lagging the Zacks Consensus Estimate of 56 cents. GAAP net income was $42 million or 8 cents per share compared with $338 million or 62 cents in the prior-year quarter.
Quarterly total revenue of $4,289 million was down 4.2% from the prior-year quarter and below the Zacks Consensus Estimate of $4,330 million. Of the total, Strategic revenues totaled $2,016 million, up 1.2% year over year. Legacy revenues accounted for $1,846 million, down 9.3%. Data Integration revenues grossed $131 million, down 6.4%. Other services contributed the remaining $296 million, down 3.9%.
Quarterly operating expenses totaled $3,897 million, up 4.6% year over year. Meanwhile, operating income was $392 million compared with $751 million in the year-ago quarter.
Cash Flow
In the fourth quarter of 2016, CenturyLink generated $1,588 million of adjusted cash from operations compared with $1,819 million in the year-ago quarter. Adjusted free cash flow, in the reported quarter, was $190 million compared with $601 million in the year-ago quarter.
Liquidity
CenturyLink exited 2016 with $222 million of cash and cash equivalents compared with $126 million at the end of 2015. At 2016 end, total debt was $19,688 million compared with $20,225 million at the end of 2015. Meanwhile, the debt-to-capitalization ratio was 0.58, in line with the figure reported at the end of 2015.
Segmental Results
Business segment revenues dropped 4.1% year over year to $2,545 million in the fourth quarter. Segmental profits were $1,073 million, down 9.3% year over year. Segmental profit margin was 42.2% compared with 44.6% in the year-ago quarter.
Consumer segment revenues were $1,448 million, down 4.3% year over year. Segmental profits were $820 million, down 8.9% year over year. Segmental profit margin was 56.6% compared with 59.5% in the year-ago quarter.
Subscriber Statistics
As of Dec 31, 2016, total access lines were 11.090 million, down 5.6% year over year. High-speed broadband customer count was 5.945 million, down 1.7% and Prism TV customer base totaled 0.325 million, up 14%. In the reported quarter, CenturyLink lost 5,000 high-speed broadband subscribers and 141,000 access lines but gained 7,000 Prism TV subscribers.
Q1 2017 Outlook
For the first quarter of 2017, the company projects adjusted earnings per share and operating revenues in the range of 51 cents to 57 cents and $4.23 billion to $4.29 billion, respectively. Core revenues are estimated in the range of $3.80 billion to $3.86 billion. Operating cash flow is projected between $1.49 billion and $1.55 billion.
2017 Guidance
For 2017, the company projects adjusted earnings per share and operating revenues in the range of $2.10 to $2.30 and $17.05 billion to $17.30 billion, respectively. Core revenues are estimated in the range of $15.25 billion to $15.50 billion. Operating cash flow is projected between $6.15 billion and $6.35 billion. Capital expenditure will be around $2.6 billion.
Recent Development
On Oct 31, 2016, CenturyLink has agreed to purchase Level 3 Communications Inc. for $24 billion. The cash and stock deal is expected to close by the end of third quarter of 2017. The merged entity will be able to compete with the likes of telecom giants like AT&T Inc. (T - Free Report) and Verizon Communications Inc. (VZ - Free Report) in the communications industry. CenturyLink currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
CenturyLink, Inc. Price, Consensus and EPS Surprise
CenturyLink, Inc. Price, Consensus and EPS Surprise | CenturyLink, Inc. Quote
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>