NEW YORK (TheStreet) -- CenturyLink (CTL - Get Report) was rising 1.67% to $30.69 on Thursday after the communications company forecast guidance for the fiscal year 2014 that edged past analysts' expectations.
The company announced in its fourth-quarter earnings report that it expects adjusted earnings per share of $2.40 to $2.60 for the full year on operating revenue of $17.9 billion to $18.1 billion. Analysts polled by Thomson Reuters expected EPS of $2.66 on revenue of $17.92 billion.
For the first quarter, CenturyLink expects adjusted profit for 58 cents to 63 cents per share on operating revenue of $4.46 billion to $4.51 billion. Analysts expected 68 cents a share on $4.46 billion in revenue.
CenturyLink reported a profit of $239 million, or 41 cents a share, in the fourth quarter, up from $233 million, or 37 cents a share, in the same period one year earlier. Adjusted profit, excluding items, ticked upward year over year to 68 cents a share from 67 cents a share. Operating revenue fell 0.9% to $.54 billion. In November, the company projected adjusted profit for the fourth quarter of 55 to 60 cents on revenue of $4.5 billion to $4.55 billion.
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TheStreet Ratings team rates CENTURYLINK INC as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate CENTURYLINK INC (CTL) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The gross profit margin for CENTURYLINK INC is rather high; currently it is at 57.59%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -23.14% is in-line with the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.0%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- CENTURYLINK INC has experienced 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 reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, CENTURYLINK INC reported lower earnings of $1.24 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $1.24).
- The debt-to-equity ratio of 1.23 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, CTL has a quick ratio of 0.56, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, CENTURYLINK INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: CTL Ratings Report