It has been about a month since the last earnings report for CenturyLink, Inc. . Shares have added about 9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CenturyLink Lags Q1 Earnings and Revenue Estimates
CenturyLink's net income in first-quarter 2017 was $163 million or $0.30 per share compared with $236 million or $0.44 per share in first-quarter 2016. Adjusted earnings per share (EPS) of $0.52 missed the Zacks Consensus Estimate by $0.01. Moreover, the bottom line declined 26.76% on a year-over-year basis.
Revenue
Quarterly total revenue of $4,209 million was down 4.36% from the prior-year quarter and below the Zacks Consensus Estimate of $4,268.9 million. Of the total, strategic revenues totaled $2,000 million, up 0.6% year over year. Legacy revenues accounted for $1,803 million, down 9.3%. Data Integration revenues grossed $118 million, up 1.7%. Other services contributed the remaining $288 million, down 6.5%.
Operating Metrics
Quarterly operating expenses totaled $3,578 million, down 3.6% year over year. Meanwhile, operating income was $631 million compared with $688 million in the year-ago quarter. Operating income margin was 15.0% versus 15.6% in the year-ago quarter.
Cash Flow
In the first quarter of 2017, CenturyLink generated $1,057 million of net cash from operations compared with $1,423 million in the year-ago quarter. Adjusted free cash flow was $492 million compared with $824 million in the year-ago quarter.
Liquidity
At the end of Mar 2017, CenturyLink had $214 million of cash and cash equivalents compared with $438 million at the end of Mar 2016. Total debt was $18,180 million compared with $18,185 million at the end of Dec 2016. Meanwhile, the debt-to-capitalization ratio was 0.39, unchanged from year-end 2016.
Segmental Results
Business segment revenues dropped 3.5% year over year to $2,356 million in the first quarter. Segmental profits were $1,035 million compared with $1,123 million in the year-ago quarter. Segmental profit margin was 43.9% compared with 46.0% in the year-ago quarter.
Consumer segment revenues were $1,412 million, down 5.2% year over year. Segmental profits were $803 million compared with $878 million in the year-ago quarter. Segmental profit margin was 56.9% compared with 59.0% in the year-ago quarter.
Subscriber Statistics
As of Mar 31, 2017, total access lines were 10.945 million, down 5.7% year over year. High-speed broadband customer count was 5.945 million, down 1.83%.
Q2 2017 Outlook
For the second quarter of 2017, the company projects adjusted earnings per share and operating revenues in the range of $0.46 to $0.52 and $4.07 billion to $4.13 billion, respectively. Core revenues are estimated in the range of $3.66 billion to $3.72 billion. Operating cash flow is projected between $1.40 billion and $1.46 billion.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
CenturyLink, Inc. Price and Consensus
VGM Scores
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stocks has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of the revisions indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is CenturyLink (CTL) Up 9% Since the Last Earnings Report?
It has been about a month since the last earnings report for CenturyLink, Inc. . Shares have added about 9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CenturyLink Lags Q1 Earnings and Revenue Estimates
CenturyLink's net income in first-quarter 2017 was $163 million or $0.30 per share compared with $236 million or $0.44 per share in first-quarter 2016. Adjusted earnings per share (EPS) of $0.52 missed the Zacks Consensus Estimate by $0.01. Moreover, the bottom line declined 26.76% on a year-over-year basis.
Revenue
Quarterly total revenue of $4,209 million was down 4.36% from the prior-year quarter and below the Zacks Consensus Estimate of $4,268.9 million. Of the total, strategic revenues totaled $2,000 million, up 0.6% year over year. Legacy revenues accounted for $1,803 million, down 9.3%. Data Integration revenues grossed $118 million, up 1.7%. Other services contributed the remaining $288 million, down 6.5%.
Operating Metrics
Quarterly operating expenses totaled $3,578 million, down 3.6% year over year. Meanwhile, operating income was $631 million compared with $688 million in the year-ago quarter. Operating income margin was 15.0% versus 15.6% in the year-ago quarter.
Cash Flow
In the first quarter of 2017, CenturyLink generated $1,057 million of net cash from operations compared with $1,423 million in the year-ago quarter. Adjusted free cash flow was $492 million compared with $824 million in the year-ago quarter.
Liquidity
At the end of Mar 2017, CenturyLink had $214 million of cash and cash equivalents compared with $438 million at the end of Mar 2016. Total debt was $18,180 million compared with $18,185 million at the end of Dec 2016. Meanwhile, the debt-to-capitalization ratio was 0.39, unchanged from year-end 2016.
Segmental Results
Business segment revenues dropped 3.5% year over year to $2,356 million in the first quarter. Segmental profits were $1,035 million compared with $1,123 million in the year-ago quarter. Segmental profit margin was 43.9% compared with 46.0% in the year-ago quarter.
Consumer segment revenues were $1,412 million, down 5.2% year over year. Segmental profits were $803 million compared with $878 million in the year-ago quarter. Segmental profit margin was 56.9% compared with 59.0% in the year-ago quarter.
Subscriber Statistics
As of Mar 31, 2017, total access lines were 10.945 million, down 5.7% year over year. High-speed broadband customer count was 5.945 million, down 1.83%.
Q2 2017 Outlook
For the second quarter of 2017, the company projects adjusted earnings per share and operating revenues in the range of $0.46 to $0.52 and $4.07 billion to $4.13 billion, respectively. Core revenues are estimated in the range of $3.66 billion to $3.72 billion. Operating cash flow is projected between $1.40 billion and $1.46 billion.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter.
CenturyLink, Inc. Price and Consensus
CenturyLink, Inc. Price and Consensus | CenturyLink, Inc. Quote
VGM Scores
At this time, the stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stocks has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
While estimates have been trending upward for the stock, the magnitude of the revisions indicates a downward shift. Interestingly, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.