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Level 3 Communications Inc
LVLT : NYSE : Technology
$52.21 -0.05 | -0.10%
Today's Range: 51.72 - 52.87
Avg. Daily Volume: 2,422,000
05/02/16 - 3:59 PM ET

Financial Analysis


LEVEL 3 COMMUNICATIONS INC's gross profit margin for the first quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Even though sales decreased, the net income has increased, representing an increase to the bottom line. LEVEL 3 COMMUNICATIONS INC has average liquidity. Currently, the Quick Ratio is 1.21 which shows that technically this company has the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 53.96% from the same quarter last year. Together, the key liquidity measurements indicate that it is relatively unlikely that the company will face financial difficulties in the near future.

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Income Statement Q1 FY16 Q1 FY15
Net Sales ($mil)2051.02053.0
EBITDA ($mil)663.0609.0
EBIT ($mil)362.0321.0
Net Income ($mil)124.0122.0


Balance Sheet Q1 FY16 Q1 FY15
Cash & Equiv. ($mil)1841.01121.0
Total Assets ($mil)25039.021303.0
Total Debt ($mil)11651.011500.0
Equity ($mil)10342.06717.0


Profitability Q1 FY16 Q1 FY15
Gross Profit Margin49.6847.44
EBITDA Margin32.3229.66
Operating Margin17.6515.64
Sales Turnover0.330.34
Return on Assets13.711.52
Return on Equity33.214.82
Debt Q1 FY16 Q1 FY15
Current Ratio1.281.05
Debt/Capital0.530.63
Interest Expense135.0180.0
Interest Coverage2.681.78


Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)356.37354.15
Div / share0.00.0
EPS0.340.35
Book value / share29.0218.97
Institutional Own % n/a n/a
Avg Daily Volume2430960.02031012.0

Valuation


BUY. LEVEL 3 COMMUNICATIONS INC's P/E ratio indicates a significant discount compared to an average of 16.41 for the Diversified Telecommunication Services industry and a significant discount compared to the S&P 500 average of 23.99. To use another comparison, its price-to-book ratio of 1.87 indicates a discount versus the S&P 500 average of 2.74 and a significant discount versus the industry average of 4.86. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, LEVEL 3 COMMUNICATIONS INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
LVLT 5.68 Peers 16.41   LVLT 9.39 Peers 8.27

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

LVLT is trading at a significant discount to its peers.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

LVLT is trading at a premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
LVLT 24.52 Peers 18.83   LVLT NM Peers 0.70

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

LVLT is trading at a significant premium to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

LVLT's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
LVLT 1.87 Peers 4.86   LVLT 751.78 Peers 42.96

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

LVLT is trading at a significant discount to its peers.

 

Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

LVLT is expected to have an earnings growth rate that significantly exceeds its peers.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
LVLT 2.35 Peers 1.85   LVLT 13.93 Peers 4.44

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

LVLT is trading at a significant premium to its industry.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

LVLT has a sales growth rate that significantly exceeds its peers.

 

 

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