GICS Sector : Communication Services
Lumen Technologies, Inc., a facilities-based technology and communications company, provides various integrated products and services under the Lumen, Quantum Fiber, and CenturyLink brands to business and residential customers in the United States and internationally.The company operates in two segments, Business and Mass Markets.It offers compute and application services, such as cloud services, IT solutions, unified communication and collaboration solutions, colocation and data center services, content delivery services, and managed security services; and IP and data services, including VPN data network, Ethernet, internet protocol (IP), and voice over internet protocol.
Lumen Technologies reported adjusted EBITDA excluding special items of $767 million in the fourth quarter, compared to $1.052 billion in the year-ago quarter. The year-over-year decline was largely impacted by expected revenue trends, including one-time revenue items in 2024. Special items impacting adjusted EBITDA totaled $280 million. The company's actual EPS came out at $0.23, beating estimates of -$0.21. Revenue growth was negative, with analysts estimating a decline of 4.7% for the next year.
Publication Date: Feb -22
The company's debt reduction efforts were significant, with the closure of the transaction with AT&T, reducing debt to under $13 billion and net leverage below four times. The deal also reduced annual CapEx by over $1 billion. Lumen has paid off all its super priority bonds and reduced interest expense by roughly $500 million. The company's net cash interest expense is expected to be between $650 million to $750 million in 2026, a reduction of over $550 million at the midpoint versus 2025.
Lumen's business revenue mix continues to improve, with North American enterprise revenue totaling 52% in the fourth quarter. The company exceeded its increased target for cost reduction, ending the year at over $400 million in run rate savings. Lumen is targeting another $300 million of cost out, totaling $700 million run rate savings, which positions it to hit its three-year $1 billion cost out target. As Chris Stansbury, CFO, noted, "We've achieved higher cost savings than planned, but also saw an increase in SG&A as we exited the year."
With a P/S Ratio of 0.65 and an EV/EBITDA of 18.78, the market seems to be pricing in a moderate growth trajectory for Lumen. The company's Free Cash Flow Yield is 4.62%, indicating a relatively attractive cash return profile. As Lumen continues to execute on its strategic plan, investors will be watching for progress on its four major financial goals, including returning free cash flow to growth, fixing its capital structure, inflecting adjusted EBITDA to growth in 2026, and returning to business revenue growth in 2028.
Lumen has made significant progress in its PCF deals, with nearly $13 billion in signed deals and more in the pipeline. The company's NAS business had a strong quarter of growth, with rising ports per customer. Lumen is expanding and upgrading its network alongside major AI companies, creating a strategic competitive advantage. The capital intensity of these deals has reduced by almost 25% due to the sale of the consumer business.
Lumen Technologies, Inc. (LUMN) Presents at Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript
Mar -03
Lumen Technologies: Investor Day Presentation Highlights Bullish Thesis
Mar -02
‘CRITICAL INFRASTRUCTURE': Lumen Technologies CEO talks partnership with Anthropic
Mar -01
Is Lumen Technologies Stock a Buy or Sell After a Director Dumped 45,000 Shares?
Feb -25
Lumen Technologies vs. Nokia: Which Stock Will Make You Richer?
Feb -25
3 Communication Stocks Likely to Benefit From Industry Tailwinds
Feb -25
Lumen Marks New Phase of Transformation at 2026 Investor Day
Feb -25
Buy 3 Momentum Anomaly Stocks as Volatility Hits Markets Hard
Feb -24
Lumen Technologies' 4.73% growth is driven by increasing demand for cloud-based services, expansion of its fiber network, and growing adoption of edge computing solutions. Additionally, the company's focus on 5G network infrastructure and strategic partnerships with major cloud providers contribute to its growth momentum.
Lumen's Mass Markets segment growth of 7.4% is driven by increasing demand for high-speed internet and fiber-based services, particularly among small and medium-sized businesses. Additionally, the company's investments in network infrastructure and customer experience enhancements have improved sales and retention rates, contributing to the segment's growth.
Lumen's network services provide a range of connectivity options, including IP VPN, Ethernet, and wavelength services, to help businesses connect their locations and data centers.
Lumen Cloud Connect provides secure, high-performance connectivity to leading cloud service providers, including Amazon Web Services, Microsoft Azure, and Google Cloud Platform.
Lumen's security services provide threat detection, incident response, and security consulting to help businesses protect their networks and data from cyber threats.
Lumen's voice and collaboration services provide advanced communication and collaboration tools, including unified communications, contact center, and conferencing solutions.
Lumen's IT services provide managed IT services, including infrastructure management, application management, and IT consulting, to help businesses optimize their IT operations.
Lumen's edge services provide low-latency, high-performance computing and storage at the edge of the network, enabling real-time processing and analysis of IoT data.
Lumen Technologies, Inc. faces moderate threat from substitutes due to the availability of alternative communication services and technologies.
Lumen Technologies, Inc. has a large customer base, but individual customers do not have significant bargaining power due to the company's diversified customer base.
Lumen Technologies, Inc. has a moderate level of dependence on its suppliers, but it has a diversified supplier base, which reduces the bargaining power of individual suppliers.
The threat of new entrants is low for Lumen Technologies, Inc. due to the high barriers to entry in the telecommunications industry, including significant capital requirements and regulatory hurdles.
The telecommunications industry is highly competitive, and Lumen Technologies, Inc. faces intense rivalry from established players and new entrants, which can lead to pricing pressure and reduced market share.
| Value | |
|---|---|
| Debt Weight | 97.97% |
| Debt Cost | 5.73% |
| Equity Weight | 2.03% |
| Equity Cost | 9.77% |
| WACC | 5.81% |
| Leverage | 4819.90% |
Value: 3.4
Growth: 7.3
Quality: 3.2
Yield: 0.0
Momentum: 10.0
Volatility: 2.0
1-Year Total Return ->
Value: 7.8
Growth: 2.1
Quality: 3.9
Yield: 3.0
Momentum: 7.0
Volatility: 1.3
1-Year Total Return ->
Value: 6.0
Growth: 4.9
Quality: 8.8
Yield: 0.0
Momentum: 1.0
Volatility: 4.0
1-Year Total Return ->
Value: 2.7
Growth: 5.9
Quality: 5.6
Yield: 0.0
Momentum: 2.5
Volatility: 5.3
1-Year Total Return ->
Value: 9.5
Growth: 1.9
Quality: 4.2
Yield: 0.0
Momentum: 2.5
Volatility: 2.3
1-Year Total Return ->
Value: 3.4
Growth: 2.9
Quality: 4.0
Yield: 0.0
Momentum: 4.0
Volatility: 2.0
1-Year Total Return ->