With the business potentially at an important milestone, we thought we’d take a closer look at Lumen Technologies, Inc.’s (NYSE:LUMN) future prospects. Lumen Technologies, Inc., a facilities-based communications company, provides various integrated services under ‘CenturyLink’ name to business and residential customers in the United States and internationally. On 31 December 2020, the US$13b market-cap company posted a loss of US$1.2b for its most recent financial year. As path to profitability is the topic on Lumen Technologies’ investors mind, we’ve decided to gauge market sentiment. In this article, we will touch on the expectations for the company’s growth and when analysts expect it to become profitable.
See our latest analysis for Lumen Technologies
According to the 13 industry analysts covering Lumen Technologies, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$1.6b in 2021. The company is therefore projected to breakeven around a year from now or less! How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 49% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
We’re not going to go through company-specific developments for Lumen Technologies given that this is a high-level summary, though, keep in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
One thing we would like to bring into light with Lumen Technologies is its debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
This article is not intended to be a comprehensive analysis on Lumen Technologies, so if you are interested in understanding the company at a deeper level, take a look at Lumen Technologies’ company page on Simply Wall St. We’ve also put together a list of relevant factors you should further examine:
- Valuation: What is Lumen Technologies worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Lumen Technologies is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Lumen Technologies’s board and the CEO’s background.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
When trading Lumen Technologies or any other investment, use the platform considered by many to be the Professional’s Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.