A month has gone by since the last earnings report for CenturyLink, Inc. . Shares have lost about 6.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 Q4 Earnings and Revenue Estimates
CenturyLink posted adjusted earnings per share of $0.54, lagging the Zacks Consensus Estimate of $0.56. GAAP net income was $42 million or $0.08 per share compared with $338 million or $0.62 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 band 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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, CenturyLink's stock has a poor Growth Score of 'F', however its momentum is doing a bit better with a 'D'. The stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. 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 solely suitable for value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.
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Why Is CenturyLink (CTL) Down 6.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for CenturyLink, Inc. . Shares have lost about 6.9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 Q4 Earnings and Revenue Estimates
CenturyLink posted adjusted earnings per share of $0.54, lagging the Zacks Consensus Estimate of $0.56. GAAP net income was $42 million or $0.08 per share compared with $338 million or $0.62 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 band 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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
CenturyLink, Inc. Price and Consensus
CenturyLink, Inc. Price and Consensus | CenturyLink, Inc. Quote
VGM Scores
At this time, CenturyLink's stock has a poor Growth Score of 'F', however its momentum is doing a bit better with a 'D'. The stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. 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 solely suitable for value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are looking for a below average return from the stock in the next few months.