Level 3 Communications Inc

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LVLT : NYSE : Technology
$50.60 | %
Today's Range: 50.13 - 50.95
Avg. Daily Volume: 2,024,800
07/29/16 - 4:04 PM ET

Financial Analysis

LEVEL 3 COMMUNICATIONS INC's gross profit margin for the second 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 1.43 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 54.02% 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 Q2 FY16 Q2 FY15
Net Sales ($mil)2056.02061.0
EBITDA ($mil)684.0643.0
EBIT ($mil)374.0355.0
Net Income ($mil)149.0-13.0

Balance Sheet Q2 FY16 Q2 FY15
Cash & Equiv. ($mil)1299.0557.0
Total Assets ($mil)24534.020884.0
Total Debt ($mil)10878.011018.0
Equity ($mil)10500.06817.0

Profitability Q2 FY16 Q2 FY15
Gross Profit Margin50.6348.62
EBITDA Margin33.2631.19
Operating Margin18.1917.22
Sales Turnover0.340.37
Return on Assets14.661.24
Return on Equity34.253.81
Debt Q2 FY16 Q2 FY15
Current Ratio1.521.04
Interest Expense140.0165.0
Interest Coverage2.672.15

Share Data Q2 FY16 Q2 FY15
Shares outstanding (mil)357.01354.57
Div / share0.00.0
Book value / share29.4119.23
Institutional Own % n/a n/a
Avg Daily Volume2033120.02430960.0


BUY. LEVEL 3 COMMUNICATIONS INC's P/E ratio indicates a significant discount compared to an average of 17.69 for the Diversified Telecommunication Services industry and a significant discount compared to the S&P 500 average of 25.07. To use another comparison, its price-to-book ratio of 1.79 indicates a discount versus the S&P 500 average of 2.81 and a significant discount versus the industry average of 4.40. The current price-to-sales ratio is above both the S&P 500 average and 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.

1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
LVLT 5.27 Peers 17.69   LVLT NA Peers 7.84

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.


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

Ratio not available.

1 2 3 4 5
premium   discount
  Price to
1 2 3 4 5
premium   discount
LVLT 24.95 Peers 18.35   LVLT NM Peers 1.20

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.

1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
LVLT 1.79 Peers 4.40   LVLT 1048.27 Peers 61.22

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.

1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
LVLT 2.29 Peers 1.84   LVLT 7.37 Peers 6.88

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 premium to its industry on this measurement.


Average. Comparing a company's sales growth to its industry helps to determine if the company is adding or losing market share.

LVLT is keeping pace with its peers on the basis of sales growth.



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