According to the information provided by Stock News, the global telecom industry has been evolving due to adoptions of 5G technology, as well as a proposed introduction of 6G. There has also been an increased demand for broadband services now that there are more people working from home than ever before. What the ramifications of COVID-19 have done is forever change how business is done and how people adapt to personal and professional situations. With Lumen Technologies, Inc., otherwise known as LUMN Stock, as well as KT Corporation, VEON Ltd., and InterDigital, these pose as solid investments worth betting on, at least for now. For the past few years, telecom's industrial growth has become rapid due to the global 5G-race as it has increased demand for more broadband. There has been a substantial amount of government support among many top nations that are striving to roll out 5G formats as a means to shape the telecom sector's long-term growth. So far, over there is a $1.2 trillion USD Infrastructure Investment and Jobs Act that passed in 2021 has earmarked $65 billion USD across America for broadband adoption. Doing so has been boosted the domestic telecom sector. Among other nations doing similar, there are expectations of a six percent CAGR growth for the next three years, which could possibly see a dollar value of $3.461 trillion USD. According to information shared by market research, the global 5G service market currently has a value of at least $21 billion and is expected to be near $86 billion by the end of 2023. These factors give every reason to believe that, yes, LUMN Stock seems to be long-term investment worthy. Advisors suggest strong, fundamental investment into Telecom Stocks: Lumen Technologies, Inc. (LUMN), as well as its competitors, KT Corporation (KT), VEON Ltd. (VEON), and InterDigital, Inc. (IDCC), are worthy of attention.
About Lumen Technologies, Inc. (LUMN)
Before becoming Lumen Technologies, Inc., this American telecommunications company was once upon a time known as Century Link. It is a member of the Standard and Poor's 500 (S&P 500) index, as well as Fortune 500. Lumen serves both domestic and global enterprise customers that stretch across North America, Latin America, European nations, Africa, Middle Eastern nations, and Asian Pacific. This is a far leap from the humble beginnings of Luman since it first started as the Oak Ridge Telephone Company, which was located in Oak Ridge, Louisiana. It was owned by F.E. Hogan, Sr., but was sold in 1930 to William Clarke and Marie Williams for $500 USD. This resulted in the company's switchboard moving into the Williams' family parlor, which remained there until 1946 when her son, Clarke McRae Williams, received ownership as a wedding gift. A year later, he acquired the telephone company belonging to Marion, Louisiana once he learned it was for sale. It eventually became his base of operations, using it as his headquarters as he grew the company with one acquisition after another. Lumen Technologies, Inc. continues to have offices located in Marion's old headquarter location, even after this family-oriented business became incorporated in 1968 as Central Telephone and Electronics. In 1971, it was renamed Century Telephone Enterprises, Inc., then to CenturyTel, Inc. in 1999. Over time, the company continued to grow through more acquisitions and partnerships. In 2008, Embarq was acquired by CenturyTel, Inc. in a $6 billion USD transaction. As of October 19, 2009, CenturyLink became the company's official brand. After even more company growth and acquisitions, it became Lumen Technologies, Inc. as of September 14, 2020.
Nowadays, LUMN is based in Monroe, Louisiana, that has its niche in technology and communications as a company that is responsible for delivering integrated communication to businesses and residences within the U.S.A. and at an international level. These services include communication network services, security, cloud solutions, voice, and managed services. These communication services include local and long-distance voice, broadband, Multi-Protocol Label Switching (MPLS), private line, special access, Ethernet, cloud hosting, managed hosting, data integration, video works, networking, and public access. It also offers Voice over Internet Protocol (VoIP), information technology, and a series of other ancillary services. There are five key segments it operates through, namely International and Global Accounts Management, Enterprise, Small and Medium Business, Wholesale, and Consumer. Its current chief executive officer is Jeff Storey, who has held this position since June 1, 2018.
In January 2022, LUMN secured a task order from the U.S. Department of Agriculture (USDA) that is worth more than $1.2 billion USD, to deliver network services to at least 9,500 USDA locations across America and abroad. Receipts of this order serve as a reflection of LUMN's position as a leader in the highly competitive U.S. telecom industry. In December 2021, LUMN had already received an order from the U.S. Army Reserve Command (USARC) to deliver Virtual Private Network (VPN) services to more than six hundred and fifty USARC locations in the U.S. This is an eleven-year contract that has a value of $23 million USD, which is expected to boost LUMN's long-term revenue. Free cash flow has since increased by twenty-nine percent, year per year, to what is now over $1 billion in its fiscal third quarter, which ended on September 30, 2021. Since then, LUMN's net income has grown by 48.6 percent, year per year, to $544 million USD. LUMN's net income per common share has also increased by fifty percent from its previous year's value of fifty-one cents.
Currently, LUMN seems to be relatively undervalued compared to KT Corporation, VEON Ltd., and InterDigital, Inc. In terms of forwarding, non-GAAP P/E, LUMN had been trading lower than the industry average by slightly under sixty-four percent. Its sixty-two-cent forward price/sales multiple is slightly over sixty-two percent lower than the average. of 1.65, and its 1.94 and 4.97 respective forward price/cash flow and EV/EBITDA ratios compared with the averages of 9.81 and 9.23. There's impressive growth history, which LUMN has experienced over the past three years. EPS estimates a fifty-four cent consensus for its fiscal fourth quarter, which ended in December 2021. This represents a year per year growth of slightly over twelve percent. Furthermore, LUMN has shown an impressive earnings history, surpassing and surprising consensus EPS estimates in each of the trailing four quarters. Marginally, LUMN's stock has gained over the past three months and has so far shown little threat of a crash happening anytime soon. LUMN has a Value and Growth grade of B and is currently ranked at number three out of nineteen stocks within the Telecom-Domestic industry. At least this at the time of this article's writing. For more up-to-date information, refer to the LUMN-related POWR Rating site, which also grants access to information such as momentum, stability, quality, and sentiment. Value investing has proven to be among the easiest and most popular methods to find great stocks in any market environment. There is an appeal to find stocks that seem to be flying under the radar and that makes it more compelling as buys worth investing in.
According to Zacks, which is dedicated to breaking down a stock's true value, illustrates a highly detailed demonstration to determine whether or not LUMN stock is still a good choice for value-driven investors at this point in time. It first brings up the Price to Earnings (PE) ratio, which shows how much are investors willing to pay for each dollar of earnings in a given stock. It is also one of the most popular methods used among investors. According to analysts' records, LUMN has been trailing for twelve months. When analyzing LUMN, it has a trend projection showing it's below its midpoint over the past five years' worth of stock performance. LUMN stock's level, for now, is fairly low, which suggests may serve as a good entry point. LUMN stocks also show a favorable rating with the sector's trailing twelve months PE Ratio, which has stood at 32.54. It suggests this stock is undervalued right now, at least when measuring it up against its peers. According to analysts, Lumen Technologies Inc. stands to see a share price of this company spiking upward in the near future. What, however, does this mean as a long-term investment?
Before going there, there is another key metric to factor in, which is price/sale ratios. This is an approach that compares a specific stock's price to its total sales. In this case, a lower reading is usually considered better. There are some people who prefer this measuring method to others as it looks at sales rather than actual earnings. For now, Lumen Technologies Inc. has a P/S ratio of approximately 0.69. This means it is lower than the S&P 500 average, which was currently at 4.94 upon the timing of this article's write-up. For now, LUMN stock has been trading at its median value. Does this provide enough conclusion of its stock valuation compared to its historical trend?
Currently, Lumen Technologies Inc. has an impressive value score among analysts as they're mostly in agreement LUMN stock serves as a good, solid choice for value investors looking for a long-term investment. So far, this makes LUMN stock a good value when looking upon it from different angles. However, it is the stock market and it has been known for its surprises. This is no exception with LUMN stock as it may seem like a good value for investors, there are additional factors worth looking into before going forward. So far, Lumen Technologies Inc.'s recent earnings seem to be mixed as this current quarter has so far seen zero estimates go higher over the past two months, at least compared to seven lower while the full year estimate has seen equal amounts of upward and downward revisions within this same time period. This has resulted in the current quarter consensus estimate falling by slightly over seven percent in the last two months but the full-year estimate remains unchanged. Because of this mixed trend, there is good reason to approach investing in LUMN stock with caution. This, however, should always be the case with any stock investment on the market. The key with LUMN is to simply watch the in-line performance from the company in the near term. Sites like Zacks, as well as Yahoo! Finance, offer valuable sources of information, as well as sound advice, on how to exercise sound strategy that shouldn't cost you a fortune.
It's About the Bottom Line
For value investors, and perhaps even more aggressive investors, when it comes to looking for something long-term, Lumen Technologies Inc. does seem to serve as an inspired choice. Its overall statistics are incredible and hard to beat. It does, however, have a sluggish industry rank, which can dampen someone's enthusiasm to jump right in with an investment without at least doing all the necessary homework. While it does seem like the past two years Lumen Technologies Inc. has underperformed in the broader market, it does have key contracts in place with the U.S. government, its military, and beyond. These factors put this company in a unique position to catapult forward with advantages no other company of its kind possesses. At this point, it's up to value investors to decide if they'd rather wait for estimates, analyst sentiment, and broader factors to turn around in this name first, or take a calculated risk and proceed. That is how the stock market works, after all. Investing in the stock market, even if a specific investment seems like a sure thing, always has a share of risks involved. The smartest move for any investor, especially if new to the game, is to do that homework and work with trust analysts that have a proven track record of not letting their clients down. If you'd rather invest on your own, then education is key to learning how to avoid costly mistakes when it comes to investing. In the case of LUMN stock, at least for the time being, this seems to be a promising option for investors looking for something long-term and stable.
Written by Allen Lee
Read more posts by Allen Lee