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Lumen Stock Rises on Better-Than-Expected Q4 Earnings
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Lumen Technologies, Inc. (LUMN - Free Report) reported fourth quarter of 2024 adjusted earnings (excluding special items) of 9 cents per share, which significantly outpaced the Zacks Consensus Estimate of a loss of 8 cents. The company reported earnings per share of 8 cents in the prior-year quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Quarterly total revenues were $3.329 billion, down 5.4% year over year. This decline was mainly due to the negative impact of divestitures, commercial agreements and the sale of the CDN business. However, the metric beat the Zacks Consensus Estimate by 3.4%.
Lumen Technologies Stock Price, Consensus and EPS Surprise
For 2024, total revenues were $13.1 billion, down 10% from 2023.
Driven by significant AI-fueled connectivity demand, Lumen secured a total of $8.5 billion in PCF deals in 2024. As AI needs surge, large companies across various industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Lumen has inked deals with various tech giants like Microsoft, Amazon, Google Cloud and Meta Platforms to provide the network capabilities for AI innovation. LUMN also remains focused on “cloudifying” telecom and driving the adoption of its network-as-a-service solutions.
The company repaid $1.6 billion of overall debt in 2024 and sent redemption notices for another $200 million of debt recently. LUMN expects $1 billion of operating expenses including network expenses that it plans to eliminate by 2027. In the current year, it expects more than 250 million of run-rate cost benefit.
Image Source: Zacks Investment Research
Following better-than-expected results, LUMN stock was up 10.7% in pre-market trading session today. In the past year, shares of LUMN have gained 305.2% compared with the Technology Services’ industry’s growth of 67%.
Looking at LUMN’s Quarterly Details
By segment, business revenues fell 5.1% to $2.659 billion while revenues from Large Enterprises plunged 5.5% to $845 million. Mid-Market Enterprise revenues declined 9.8% to $452 million. Public Sector revenues were up 11% to $554 million. Revenues of North America’s Enterprise Channels were down 2.2% to $1.851 billion. The metric for Wholesale decreased 4.5% to $716 million.
Revenues from Mass Markets were down 6.3% year over year to $670 million.
Lumen anticipates witnessing healthy momentum in the Quantum business going forward as it plans to launch Quantum Fiber quote-to-cash network architecture to customers in late 2025.
The company added 42,000 Quantum fiber subscribers, taking the count to 1.1 million in the reported quarter.
In the fourth quarter, LUMN added 105,000 Fiber broadband-enabled locations. As of Dec. 31, 2024, the total enabled locations in the retained states were 4.16 million. The company is targeting to achieve 500,000 enabled locations in 2025.
LUMN’s Q4 Margin Performance
Total operating expenses decreased 40% year over year to $3,175 million.
Operating income was $154 million compared with a loss of $1.776 billion in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $1.052 billion from $1.099 billion for respective margins of 31.6% and 31.2%.
LUMN’s Cash Flow & Liquidity
In the fourth quarter, Lumen generated $688 million of net cash from operations compared with $784 million in the prior-year quarter.
Free cash outflow (excluding cash special items) for the fourth quarter was $174 million compared with free cash flow of $50 million in the prior-year quarter. This downtick was due to timing of cash from PCF deals.
As of Dec. 31, 2024, the company had $1.889 billion in cash and cash equivalents with $17.494 billion of long-term debt compared with the respective figures of $2.64 billion and $18.142 billion as of Sept. 30, 2024.
LUMN’s 2025 Outlook
For 2025, Lumen expects adjusted EBITDA in the band of $3.2-$3.4 billion and capital expenditures to be between $4.1 billion and $4.3 billion. EBITDA in 2025 is expected to be below the levels of 2024, owing to the investments in transformation and costs, along with higher startup costs for PCF sales and legacy revenue declines. LUMN expects EBITDA to significantly rebound in 2026 and be more than $3.5 billion. It also anticipates that the metric will register growth thereafter.
Higher capex expectations are mainly due to the costs of executing the signed PCF contracts.
Free cash flow is expected to be between $700 million and $900 million.
Verizon Communications Inc. (VZ - Free Report) reported healthy fourth-quarter results, with adjusted earnings and revenues beating the Zacks Consensus Estimate. Excluding non-recurring items, quarterly adjusted earnings were $1.10 per share compared with $1.08 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by a penny. Quarterly total operating revenues improved 1.6% to $35.68 billion with growth in service revenues and higher wireless equipment revenues driven by targeted pricing actions, customer growth, sales of perks and add-on services and growth in fixed wireless access. The top line beat the consensus estimate of $35.4 billion.
Rogers Communications Inc (RCI - Free Report) reported fourth-quarter 2024 adjusted earnings of $1.04 per share, which beat the Zacks Consensus Estimate by 9.47% and increased 19.54% year over year. Revenues of $3.92 billion beat the consensus mark by 4.08% while declined 0.03% year over year. In domestic currency (Canadian dollar), adjusted earnings increased 23% year over year to C$1.46 per share. Total revenues increased 3% year over year, reaching C$5.48 billion, driven primarily by revenue growth in media businesses.
T-Mobile US, Inc. (TMUS - Free Report) reported impressive fourth-quarter 2024 results, with both top and bottom lines surpassing the Zacks Consensus Estimate. The top-line expansion was backed by industry-leading postpaid customer growth. T-Mobile follows a multi-layer approach to 5G, with dedicated standalone 5G deployed nationwide across 600MHz, 1.9GHz and 2.5GHz bands. Net income in the fourth quarter was $2.98 billion or $2.57 per share, up from $2.01 billion or $1.67 in the year-ago quarter. The 48% year-over-year growth was primarily driven by top-line expansion. The bottom line exceeded the Zacks Consensus Estimate of $2.17.
Net sales during the quarter were $21.87 billion, up from $20.47 billion in the year-ago quarter, driven by solid growth in service and equipment revenues. The top line beat the consensus estimate of $21.17 billion.
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Lumen Stock Rises on Better-Than-Expected Q4 Earnings
Lumen Technologies, Inc. (LUMN - Free Report) reported fourth quarter of 2024 adjusted earnings (excluding special items) of 9 cents per share, which significantly outpaced the Zacks Consensus Estimate of a loss of 8 cents. The company reported earnings per share of 8 cents in the prior-year quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Quarterly total revenues were $3.329 billion, down 5.4% year over year. This decline was mainly due to the negative impact of divestitures, commercial agreements and the sale of the CDN business. However, the metric beat the Zacks Consensus Estimate by 3.4%.
Lumen Technologies Stock Price, Consensus and EPS Surprise
Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote
For 2024, total revenues were $13.1 billion, down 10% from 2023.
Driven by significant AI-fueled connectivity demand, Lumen secured a total of $8.5 billion in PCF deals in 2024. As AI needs surge, large companies across various industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Lumen has inked deals with various tech giants like Microsoft, Amazon, Google Cloud and Meta Platforms to provide the network capabilities for AI innovation. LUMN also remains focused on “cloudifying” telecom and driving the adoption of its network-as-a-service solutions.
The company repaid $1.6 billion of overall debt in 2024 and sent redemption notices for another $200 million of debt recently. LUMN expects $1 billion of operating expenses including network expenses that it plans to eliminate by 2027. In the current year, it expects more than 250 million of run-rate cost benefit.
Image Source: Zacks Investment Research
Following better-than-expected results, LUMN stock was up 10.7% in pre-market trading session today. In the past year, shares of LUMN have gained 305.2% compared with the Technology Services’ industry’s growth of 67%.
Looking at LUMN’s Quarterly Details
By segment, business revenues fell 5.1% to $2.659 billion while revenues from Large Enterprises plunged 5.5% to $845 million. Mid-Market Enterprise revenues declined 9.8% to $452 million. Public Sector revenues were up 11% to $554 million. Revenues of North America’s Enterprise Channels were down 2.2% to $1.851 billion. The metric for Wholesale decreased 4.5% to $716 million.
Revenues from Mass Markets were down 6.3% year over year to $670 million.
Lumen anticipates witnessing healthy momentum in the Quantum business going forward as it plans to launch Quantum Fiber quote-to-cash network architecture to customers in late 2025.
The company added 42,000 Quantum fiber subscribers, taking the count to 1.1 million in the reported quarter.
In the fourth quarter, LUMN added 105,000 Fiber broadband-enabled locations. As of Dec. 31, 2024, the total enabled locations in the retained states were 4.16 million. The company is targeting to achieve 500,000 enabled locations in 2025.
LUMN’s Q4 Margin Performance
Total operating expenses decreased 40% year over year to $3,175 million.
Operating income was $154 million compared with a loss of $1.776 billion in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $1.052 billion from $1.099 billion for respective margins of 31.6% and 31.2%.
LUMN’s Cash Flow & Liquidity
In the fourth quarter, Lumen generated $688 million of net cash from operations compared with $784 million in the prior-year quarter.
Free cash outflow (excluding cash special items) for the fourth quarter was $174 million compared with free cash flow of $50 million in the prior-year quarter. This downtick was due to timing of cash from PCF deals.
As of Dec. 31, 2024, the company had $1.889 billion in cash and cash equivalents with $17.494 billion of long-term debt compared with the respective figures of $2.64 billion and $18.142 billion as of Sept. 30, 2024.
LUMN’s 2025 Outlook
For 2025, Lumen expects adjusted EBITDA in the band of $3.2-$3.4 billion and capital expenditures to be between $4.1 billion and $4.3 billion. EBITDA in 2025 is expected to be below the levels of 2024, owing to the investments in transformation and costs, along with higher startup costs for PCF sales and legacy revenue declines. LUMN expects EBITDA to significantly rebound in 2026 and be more than $3.5 billion. It also anticipates that the metric will register growth thereafter.
Higher capex expectations are mainly due to the costs of executing the signed PCF contracts.
Free cash flow is expected to be between $700 million and $900 million.
LUMN’s Zacks Rank
Lumen currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance of Lumen Competitors
Verizon Communications Inc. (VZ - Free Report) reported healthy fourth-quarter results, with adjusted earnings and revenues beating the Zacks Consensus Estimate. Excluding non-recurring items, quarterly adjusted earnings were $1.10 per share compared with $1.08 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by a penny. Quarterly total operating revenues improved 1.6% to $35.68 billion with growth in service revenues and higher wireless equipment revenues driven by targeted pricing actions, customer growth, sales of perks and add-on services and growth in fixed wireless access. The top line beat the consensus estimate of $35.4 billion.
Rogers Communications Inc (RCI - Free Report) reported fourth-quarter 2024 adjusted earnings of $1.04 per share, which beat the Zacks Consensus Estimate by 9.47% and increased 19.54% year over year. Revenues of $3.92 billion beat the consensus mark by 4.08% while declined 0.03% year over year. In domestic currency (Canadian dollar), adjusted earnings increased 23% year over year to C$1.46 per share. Total revenues increased 3% year over year, reaching C$5.48 billion, driven primarily by revenue growth in media businesses.
T-Mobile US, Inc. (TMUS - Free Report) reported impressive fourth-quarter 2024 results, with both top and bottom lines surpassing the Zacks Consensus Estimate. The top-line expansion was backed by industry-leading postpaid customer growth. T-Mobile follows a multi-layer approach to 5G, with dedicated standalone 5G deployed nationwide across 600MHz, 1.9GHz and 2.5GHz bands. Net income in the fourth quarter was $2.98 billion or $2.57 per share, up from $2.01 billion or $1.67 in the year-ago quarter. The 48% year-over-year growth was primarily driven by top-line expansion. The bottom line exceeded the Zacks Consensus Estimate of $2.17.
Net sales during the quarter were $21.87 billion, up from $20.47 billion in the year-ago quarter, driven by solid growth in service and equipment revenues. The top line beat the consensus estimate of $21.17 billion.