Factors to Note Ahead of Lumen's (LUMN) Q3 Earnings Release
Lumen Technologies, Inc LUMN is scheduled to report third-quarter 2023 results on Oct 31, after the closing bell.
The Zacks Consensus Estimate for total revenues is pegged at $3.59 billion, suggesting a fall of 18.2% from a year ago. The consensus estimate for earnings is currently pegged at 6 cents per share, indicating a decline of 57.1% from the year-ago levels.
The company missed the Zacks Consensus Estimate in two of the last four quarters and beat in the remaining quarters. It has a trailing four-quarter earnings surprise of 47.9%, on average.
In the last reported quarter, Lumen, an LA-based telecommunications company, recorded adjusted earnings per share (excluding special items) of 10 cents compared with 35 cents in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 9 cents.
Lumen Technologies, Inc. Price and EPS Surprise
Lumen Technologies, Inc. price-eps-surprise | Lumen Technologies, Inc. Quote
Quarterly total revenues were $3,661 million, down 20.6% year over year on a reported basis and 2.1% on a sequential basis. The Zacks Consensus Estimate was pegged at $3,578 million. Second-quarter revenues were significantly impacted due to the completion of the sale of its Latin America business and its 20-state ILEC business to Apollo.
In the past year, shares of LUMN have lost 80.9% compared with the sub-industry’s gain of 14.3%.
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Factors to Note
Momentum in security, cloud, unified communications and IT products is likely to have offered some cushioning to the top-line performance. Management is also focusing on cost discipline and shutting down non-value-added processes, which are likely to provide some support to the bottom line.
Continued investments in Quantum Fiber and enterprise business may have been positives. The company added 21,000 Quantum fiber subscribers, taking the count to 877,000 in the last reported quarter. In the second quarter, total enablements were approximately 130,000. As of Jun 30, 2023, the total enabled locations in the retained states were 3.4 million.
Volatile supply-chain dynamics, uncertainty prevailing over global macroeconomic conditions, forex volatility and inflationary pressure are likely to have a negative impact on Lumen’s third-quarter revenues.
While selling of non-accretive businesses is likely to bode well in the long term, it is expected to affect results in the near term. In August 2022, LUMN completed the divestiture of its Latin America business. It concluded the sale of its 20-state ILEC business to Apollo in October 2022. Management also announced to divest its Europe, Middle East and Asia business to Colt Technology Services for $1.8 billion in October 2022.
Also, LUMN has been undergoing a time-consuming digital transformation process. Weakness in the Business, Enterprise Channels and Mass markets business segments along with massive debt are other headwinds.
Our projection for the Business and Mass Markets segments’ revenues is pegged at $2,762.9 million and $811.7 million, respectively.
Recent Developments
In October 2023, Lumen sold a few of its content delivery network (CDN) service contracts to Akamai Technologies. Both companies will operate under a transition services agreement for 90 days. Post that period, Lumen plans to discontinue its CDN services. Customers will be able to work with Akamai for all their CDN requirements.
In September 2023, LUMN added new enhancements to its Secure Access Service Edge (SASE) solutions to make it simpler and more flexible for clients. These solutions are designed to enhance enterprise SASE’s purchase, configuration and management digitally.
In August 2023, management announced that it had collaborated with Microsoft to implement Microsoft 365 Copilot, which aims to empower approximately 30,000 employees. The company is currently beta-testing Microsoft 365 Copilot through Early Access Program.
It has already observed positive outcomes by equipping specific teams with Microsoft's large language model AI solutions and further plans to expand the utilization of this technology. Microsoft 365 Copilot has the potential to revolutionize the telecommunications industry by providing employees with a real-time intelligent assistance tool to boost creativity, productivity and skills.
Earnings Whispers
Our proven model predicts an earnings beat for Lumen this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
LUMN has an Earnings ESP of +23.53% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks to Consider
Here are a few stocks that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter.
Itron ITRI has an Earnings ESP of +23.18% and currently flaunts a Zacks Rank of 1. ITRI is set to announce quarterly figures on Nov 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ITRI’s to-be-reported quarter’s earnings and revenues is pegged at 51 cents per share and $540.8 million, respectively. Shares of ITRI have gained 16.9% in the past year.
CDW Corporation CDW has an Earnings ESP of +0.17% and presently carries a Zacks Rank #3. CDW is slated to release quarterly numbers on Nov 1.
The Zacks Consensus Estimate for CDW’s to-be-reported quarter’s earnings and revenues is pegged at $2.59 per share and $5.82 billion, respectively. Shares of CDW have increased 14.8% in the past year.
GoDaddy Inc GDDY has an Earnings ESP of +14.09% and currently sports a Zacks Rank #1. GDDY is scheduled to report quarterly earnings on Nov 2.
The Zacks Consensus Estimate for GDDY’s to-be-reported quarter’s earnings and revenues is pegged at 71 cents per share and $1.06 billion, respectively. Shares of GDDY have plunged 10.6% in the past year.
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