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Lumen Technologies Inc LUMN

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Familiar Story for Lumen in Q1: Weak Revenue Accompanied by Expanding Margins and Solid Cash Flow

Matthew Dolgin, CFA Equity Analyst

Analyst Note

| Matthew Dolgin, CFA |

While our expectation is for Lumen’s revenue to continue declining for the next several years, we were disappointed by the magnitude and composition of the drop during the first quarter. While we thought the top-line result was poor, Lumen was able to accelerate EBITDA margin expansion and generated more cash than we expected. We’re maintaining our $18 fair value estimate, and in our view, the stock remains significantly undervalued considering the level of cash Lumen continues to generate and its opportunity to keep expanding margins.

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Company Profile

Business Description

With 450,000 route miles of fiber, including over 35,000 route miles of subsea fiber connecting Europe, Asia, and Latin America, Lumen Technologies is one of the United States’ largest telecommunications carriers serving global enterprises. The merger further shifted the company’s operations toward businesses (over 70% of revenue) and away from its legacy consumer business. Lumen offers businesses a full menu of communications services, providing colocation and data center services, data transportation, and end-user phone and Internet service. On the consumer side, Lumen provides broadband and phone service across 37 states, where it has 4.5 million broadband customers.

Contact
100 CenturyLink Drive
Monroe, LA, 71203
T +1 318 388-9000
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type High Yield
Employees 38,000

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