Here are the facts
Lumen Zacks.com has made LUMN one of the most sought-after stocks recently. You might also want to examine some facts that could influence the stock’s performance in near-term.
Over the past month, shares of this metal forging and stampings have returned -10.3%, compared to the Zacks S&P 500 composite’s -4.4% change. Lumen, which is part of the Zacks Technology Services sector, lost 4.2% during this time. The question is now: What will the stock do in the future?
Media reports and rumors about significant changes in a company’s prospects can make their stock ‘trending,’ which leads to an immediate price increase. However, there are fundamental facts that will ultimately dominate the decision-making process for buy-and-hold.
Revisions to Earnings estimates
Zacks places more importance on evaluating the changes in an organization’s earnings projection than any other aspect. We believe that the future earnings stream is what determines the fair value of a stock’s stock.
The stock’s sell-side analysts are responsible for revising earnings estimates to reflect changes in business trends. The fair value of a stock increases if its earnings estimates rise. An increase in fair value over the current stock price will drive investors to buy the stock. This leads to the stock price moving higher. Research has demonstrated a strong correlation in the near-term stock market movements to trends in earnings estimate revisions.
Lumen is forecast to report earnings at $0.14 per share in the current quarter. This represents a change year-over–year of -72.6%. Over the last 30 Days, the Zacks Consensus Expected Earnings has changed by -12.5%.
Consensus earnings estimates of $1.18 for current fiscal year indicate a year-over year change of -38.2%. Over the past 30 days, this estimate has fluctuated by -2.1%.
The consensus earnings estimate for the next fiscal year of $0.80 represents a decrease of -32.5% compared to what Lumen is expected report last year. The estimate has fluctuated by -5.9% over the past month.
Our proprietary stock rating tool, Zacks Rank (proprietary stock rating tool), has a solid track record and provides a better picture of a stock’s near-term price direction. It effectively harnesses earnings estimate revisions to provide a more definitive picture. Lumen is Zacks Rank #3 (Hold) because of the large change in consensus estimate as well as three other factors that are related to earnings estimations.
Below is a chart that shows the evolution of the forward 12-month consensus EPS estimation for the company.
12 Month EPS
Projectioned Revenue Growth
Although earnings growth is the best indicator of a company’s financial health, it doesn’t mean much if it can’t increase its revenues. It is almost impossible for a company’s earnings to grow without increasing its revenue over long periods. It is therefore crucial to know the company’s potential revenue growth.
Lumen’s consensus sales estimate for the current quarter of $3.78 Billion indicates a year-overyear increase of -22.1%. For the next fiscal year, the estimates of $17.47 and $14.73 trillion indicate changes of -11.3% & -15.7% respectively.
Last Reported Results & Surprise History
Lumen reported revenue of $4.39 trillion in the most recent quarter. This is a -10.2% increase year-over-year. The same period saw an EPS of $0.14 compared with $0.49 last year.
The reported revenues are a surprise at -0.51% when compared to the Zacks Consensus estimate of $4.41 trillion. The EPS surprise was -61.11%.
The company has exceeded EPS estimates only once in the past four quarters. Only once did the company surpass consensus revenue estimates during this period.
Valuation
Investment decisions cannot be made without considering the stock’s value. It is crucial to assess whether the stock’s current price accurately reflects the intrinsic value and growth prospects of the company.
Comparing the company’s current valuation multiples, such price-to earnings (P/E), and price-tosales (P/S), with its historical values can help determine if its stock is fair valued, overvalued or undervalued. Additionally, it helps to compare the company relative its peers using these parameters. This gives you a good idea of the reasonability for the stock’s stock price.
The Zacks Style Scores Zacks Valuation Style Score (part the Zacks Style Scores System) is a useful tool for identifying whether a stock’s value is rightly or incorrectly valued.
Lumen’s grade on this front is A, meaning that it is trading at an advantage over its peers. Click here for the valuation metrics used to determine this grade.
Conclusion
These facts and other Zacks.com information might help you decide if it is worth paying attention to Lumen’s market buzz. The #3 Zacks Rank suggests that Lumen may be in line with the wider market in the near future.
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Lumen Technologies, Inc. (LUMN) : Free Stock Analysis Report