CenturyLink (CTL) to Report Q4 Earnings: What's in Store?

CenturyLink, Inc. CTL is scheduled to report fourth-quarter 2019 results on Feb 12, after the closing bell. In the last reported quarter, the company posted a negative earnings surprise of 3.1%, missing the Zacks Consensus Estimate by 1 cent. CenturyLink topped the Zacks Consensus Estimate for earnings thrice in the trailing four quarters, the positive surprise being 8.8%, on average.

The Monroe, LA-based communications company is expected to have recorded lower aggregate revenues on a year-over-year basis, primarily due to waning sales at Consumer segment. It continued to execute strategy around four key areas — investing in growth through product and network expansions, delivering an enhanced customer experience across business, transforming operations to improve efficiency and employee experience, and deleveraging to strengthen its balance sheet.  

Let’s find out how things have shaped up prior to the announcement.

Factors at Play

CenturyLink’s investments in growth and operational efficiency are likely to have translated into year-over-year growth in Enterprise and International/Global Accounts business units, along with expansion of adjusted EBITDA margin. During the fourth quarter, CenturyLink expanded its network capabilities in Franklin, TN, to provide increased speed and reliability, and give more businesses access to its advanced technologies and global network. The company provided a new option for connecting business premises and public data centers to cloud environments with the expansion of its Cloud Connect Dynamic Connections service to Google Cloud Platform.

CenturyLink was selected by the state of California Governor’s Office of Emergency Service to help enable emergency call management solutions to modernize Southern California’s 911 system to a Next Generation 911 platform. It expanded fiber Internet service to more than 2,500 homes and businesses in Loup City, Pender-Thurston, St. Paul, Valley and Waterloo supported by investments from CenturyLink and a grant from Nebraska’s State Broadband Grant.

New York-based Tapestry, Inc. implemented a dynamic solution that combines technology and services from CenturyLink and SAP on a global scale. CenturyLink launched a new content delivery network platform that allows businesses to create highly responsive and more secure personalized web application experiences. The company expanded its network to bring connectivity to Denver and the surrounding area, with fiber gigabit Internet service for thousands of homes and businesses.

The company expanded its network by completing a 33-mile fiber ring in Troy, MI to meet the burgeoning demand for high-speed fiber connectivity and supercharging the autonomous vehicle tech corridor. It built new metro networks in Madrid, Spain and Marseille, France, and connected an additional 90 data centers to its network in six core markets. In Europe, CenturyLink connects to more than 400 public and private data centers and more than 2,000 on-net, fiber-fed enterprise buildings.

Despite its sustained focus on infrastructure development for improving revenue trajectory in the long term, CenturyLink is likely to report lower revenues for the fourth quarter. This is due to tough year-over-year comparison, as the company implemented guardrails to drive revenues during the course of 2018. For the December quarter, the Zacks Consensus Estimate for total revenues stands at $5,544 million, implying a decline of 4% from the year-ago quarter’s reported figure. Consequently, adjusted earnings per share are pegged at 33 cents, indicating a drop of 10.8% from the prior-year quarter’s reported figure.

What Our Model Says

Our proven model doesn’t predict an earnings beat for CenturyLink 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: CenturyLink’s Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% as both are pegged at 33 cents.

CenturyLink, Inc. Price and EPS Surprise

CenturyLink, Inc. Price and EPS Surprise

CenturyLink, Inc. price-eps-surprise | CenturyLink, Inc. Quote

Zacks Rank: CenturyLink currently has a Zacks Rank #3.  

Stocks to Consider

Here are some companies 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:

Applied Materials, Inc. AMAT is slated to release quarterly results on Feb 12. It has an Earnings ESP of +2.89% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

YETI Holdings, Inc. YETI is scheduled to release results on Feb 13. The company has an Earnings ESP of +4.65% and sports a Zacks Rank #1.  

Alteryx, Inc. AYX has an Earnings ESP of +6.49% and sports a Zacks Rank of 1. The company is set to report results on Feb 13.

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