Why CenturyLink (CTL) Stock Hit a One-Year High Today

NEW YORK (TheStreet) -- CenturyLink  (CTL) rose to a 52-week high of $45.67 on Tuesday after the communications company announced it had expanded its advertising agreement with Viamedia.

The agreement now includes Phoenix; Omaha, NE; and Colorado Springs, CO, three cities where the company offers its CenturyLink Prism TV service.

CenturyLink also received a boost from Windstream's  (WIN) announcement that it would spin off its assets into a publicly traded REIT to gain the benefit of tax savings. The news has led the telecommunications sector higher on Tuesday, as investors speculate peer companies could follow suit.

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The stock was up 8.54% to $40.93 at 10:57 a.m. More than 30 million shares had changed hands, compared to the average volume of 4,156,690.

Separately, 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. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Despite its growing revenue, the company underperformed as compared with the industry average of 3.5%. Since the same quarter one year prior, revenues slightly increased by 0.6%. 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.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
  • The gross profit margin for CENTURYLINK INC is rather high; currently it is at 57.45%. 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 4.47% trails the industry average.
  • 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Telecommunication Services industry. The net income has significantly decreased by 31.9% when compared to the same quarter one year ago, falling from $298.00 million to $203.00 million.
  • You can view the full analysis from the report here: CTL Ratings Report

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

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.

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