CenturyLink Inc Stock Buy Recommendation Reiterated (CTL)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- CenturyLink (NYSE:CTL) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its robust revenue growth, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

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Highlights from the ratings report include:

• CTL's very impressive revenue growth greatly exceeded the industry average of 7.4%. Since the same quarter one year prior, revenues leaped by 171.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• Net operating cash flow has significantly increased by 136.32% to $1,583.00 million when compared to the same quarter last year. In addition, CENTURYLINK INC has also vastly surpassed the industry average cash flow growth rate of 16.62%.
• The gross profit margin for CENTURYLINK INC is rather high; currently it is at 59.50%. Regardless of CTL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 4.30% trails the industry average.
• CENTURYLINK INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CENTURYLINK INC reported lower earnings of $1.29 versus $3.13 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $1.29).
• Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

CenturyLink, Inc. operates as an integrated telecommunications company in the United States. The company provides local and long-distance, network access, private line, public access, broadband, data, managed hosting, colocation, wireless, and video services to consumers and businesses. The company has a P/E ratio of 54.1, above the average telecommunications industry P/E ratio of 48.3 and above the S&P 500 P/E ratio of 17.7. CenturyLink has a market cap of $26.1 billion and is part of the technology sector and telecommunications industry. Shares are up 15.2% year to date as of the close of trading on Wednesday.

You can view the full CenturyLink Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

 

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