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What's in the Offing for Lumen (LUMN) This Earnings Season?

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Lumen Technologies, Inc. (LUMN - Free Report) is scheduled to report second-quarter 2021 results on Aug 4, after the closing bell. In the last reported quarter, the company delivered an earnings surprise of 7.3%, surpassing the Zacks Consensus Estimate by 3 cents.

In the second quarter, the Monroe, LA-based telecommunications company is expected to have recorded lower revenues on a year-over-year basis due to challenges posed by the pandemic. However, Lumen is focused on enhancing its platform capabilities while catering to the dynamic requirements of its wide enterprise customer base on the back of strategic investments and partnerships in this hour of crisis.

Factors at Play

During the quarter under review, Lumen partnered with T-Mobile US, Inc. (TMUS - Free Report) to boost its Edge Computing platform by capitalizing on the latter’s 5G network. The collaboration will give enterprise and government organizations a seamless access to Lumen’s several fiber-connected enterprise locations paired with T-Mobile’s industry-leading 5G network to build, manage and scale applications across distributed environments. The alliance will not only reinforce the long-standing relationship between both the entities but also accelerate business innovation to meet the data-intensive challenges across a plethora of industry verticals and use cases.  

The company secured a 12-year task order from the U.S. Navy Judge Advocate General (JAG) Corps to provide its superior connectivity solutions through software-defined wide area networking and managed security services hosted at the company's federal data centers in support of 20 Navy JAG sites in the continental United States. It unveiled Lumen Media Transformation platform to revamp broadcast workflows with an improved video content delivery experience.

The fully-managed end-to-end content delivery service offers advanced capabilities to enrich superior online viewing experiences by combining advanced video encoding technologies with the Lumen global fiber and Edge networks. The launch is aimed at tapping potential opportunities in the thriving over-the-top markets by driving time-to-market for global broadcasters and pay-TV operators.

During the second quarter, the company also launched Lumen Solutions for Microsoft Teams to aid enterprises shift from complex communications to efficient collaboration. It is a managed, unified communications offering that capitalizes on the Lumen platform to enhance business agility and employee productivity. Further, the solution will aid businesses to seamlessly adopt 'work from anywhere' policies, thereby maintaining business continuity amid the pandemic situation.

However, decline in legacy voice services, coupled with economic adversities led by the virus outbreak, is likely to have had an unfavorable impact on Lumen’s second-quarter revenues. Substitution of its traditional wireline telephone services by wireless and other competitive low-priced offerings might have further hurt its top line in the to-be-reported quarter.

The Zacks Consensus Estimate for total revenues for the second quarter is pegged at $5,000 million, suggesting a fall from the year-earlier reported figure of $5,192 million. The consensus mark for earnings is currently pegged at 43 cents per share, indicating a 2.4% increase from 42 cents reported in the year-earlier quarter.

Earnings Whispers

Our proven model does not predict an earnings beat for Lumen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Lumen’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -2.35% as the former is pegged at 42 cents and the latter at 43 cents.

Lumen Technologies, Inc. Price and EPS Surprise

Zacks Rank: Lumen currently has a Zacks Rank #3.

Stocks to Consider

Here are some companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

General Motors Company (GM - Free Report) is slated to release second-quarter 2021 results on Aug 4. It has an Earnings ESP of +19.83% and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Clean Harbors, Inc. (CLH - Free Report) has an Earnings ESP of +18.71% and a Zacks Rank of 2. The company is set to report second-quarter 2021 results on Aug 4.

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