Level 3 Communications Inc

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LVLT : NYSE : Technology
$57.61 | %
Today's Range: 57.41 - 57.83
Avg. Daily Volume: 2219100.0
02/24/17 - 4:02 PM ET

Financial Analysis


LEVEL 3 COMMUNICATIONS INC's gross profit margin for the fourth quarter of its fiscal year 2016 is essentially unchanged when compared to the same period a year ago. Sales and net income have dropped, underperforming the average competitor within its industry. LEVEL 3 COMMUNICATIONS INC has strong liquidity. Currently, the Quick Ratio is 1.73 which shows the ability to cover short-term cash needs. The company's liquidity has increased from the same period last year, indicating improving cash flow.

During the same period, stockholders' equity ("net worth") has increased by 7.81% from the same quarter last year. The key liquidity measurements indicate that the company is unlikely to face financial difficulties in the near future.

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Income Statement Q4 FY16 Q4 FY15
Net Sales ($mil)2032.02053.0
EBITDA ($mil)674.0636.0
EBIT ($mil)354.0342.0
Net Income ($mil)250.03323.0


Balance Sheet Q4 FY16 Q4 FY15
Cash & Equiv. ($mil)1826.0862.0
Total Assets ($mil)24888.024145.0
Total Debt ($mil)10884.011009.0
Equity ($mil)10917.010126.0


Profitability Q4 FY16 Q4 FY15
Gross Profit Margin66.5465.51
EBITDA Margin33.1630.97
Operating Margin17.4216.66
Sales Turnover0.330.34
Return on Assets2.7214.21
Return on Equity6.233.9
Debt Q4 FY16 Q4 FY15
Current Ratio1.81.24
Debt/Capital0.50.52
Interest Expense132.0152.0
Interest Coverage2.682.25


Share Data Q4 FY16 Q4 FY15
Shares outstanding (mil)359.69356.37
Div / share0.00.0
EPS0.699.24
Book value / share30.3528.41
Institutional Own % n/a n/a
Avg Daily Volume2198290.04315033.0

Valuation


BUY. LEVEL 3 COMMUNICATIONS INC's P/E ratio indicates a premium compared to an average of 27.22 for the Diversified Telecommunication Services industry and a premium compared to the S&P 500 average of 26.35. To use another comparison, its price-to-book ratio of 1.89 indicates a discount versus the S&P 500 average of 2.94 and a significant discount versus the industry average of 3.72. The current price-to-sales ratio is above both the S&P 500 average and the industry average, indicating a premium. The valuation analysis reveals that, LEVEL 3 COMMUNICATIONS INC seems to be trading at a premium 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 30.66 Peers 27.22   LVLT 8.80 Peers 8.68

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

LVLT is trading at a premium to its peers.

 

Average. 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 valuation on par 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 32.12 Peers 26.00   LVLT NM Peers 0.69

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 1.89 Peers 3.72   LVLT -80.42 Peers -6.66

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.

 

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

However, LVLT is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
LVLT 2.52 Peers 2.06   LVLT -0.70 Peers 7.07

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.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

LVLT significantly trails its peers on the basis of sales growth

 

 

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