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CenturyLink (CTL) Marked As A Barbarian At The Gate

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified CenturyLink ( CTL) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified CenturyLink as such a stock due to the following factors:

  • CTL has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $143.8 million.
  • CTL has traded 1.1 million shares today.
  • CTL traded in a range 200.1% of the normal price range with a price range of $0.72.
  • CTL traded above its daily resistance level (quality: 273 days, meaning that the stock is crossing a resistance level set by the last 273 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.

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More details on CTL:

CenturyLink, Inc. operates as an integrated telecommunications company in the United States. The company operates through four segments: Consumer, Business, Wholesale, and Data Hosting. The stock currently has a dividend yield of 6.2%. Currently there are 8 analysts that rate CenturyLink a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for CenturyLink has been 5.2 million shares per day over the past 30 days. CenturyLink has a market cap of $20.0 billion and is part of the technology sector and telecommunications industry. The stock has a beta of 0.66 and a short float of 9.8% with 12.04 days to cover. Shares are up 8.2% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates CenturyLink as a hold. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, expanding profit margins and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and a generally disappointing performance in the stock itself.

Highlights from the ratings report include:

  • CENTURYLINK INC has improved earnings per share by 10.8% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CENTURYLINK INC swung to a loss, reporting -$0.43 versus $1.24 in the prior year. This year, the market expects an improvement in earnings ($2.56 versus -$0.43).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 0.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Net operating cash flow has decreased to $1,151.00 million or 16.53% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CENTURYLINK INC has marginally lower results.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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