Skip to main content

Lumen Technologies Inc(LUMN-N)
NYSE

Today's Change
Real-Time Last Update Last Sale Cboe BZX Real-Time

Why Lumen Technologies Stock Is Crashing Today

Motley Fool - Wed Nov 1, 2023

Lumen Technologies(NYSE: LUMN) stock is plummeting on the heels of its recent third-quarter earnings release. The company's share price was down 27.4% as of 1:30 p.m. ET, according to data from S&P Global Market Intelligence.

Lumen published its Q3 results after the market closed yesterday, reporting earnings for the period that fell short of Wall Street's expectations. While sales for the period did come in higher than anticipated, investors are seeing worrying signs in the company's latest report and financing moves.

Lumen's earnings miss isn't the only thing shocking investors

Lumen posted a non-GAAP (adjusted) loss of $0.09 per share on revenue of $3.64 billion in the third quarter. Meanwhile, the average analyst estimate had called for an adjusted profit of $0.06 per share on revenue of approximately $3.61 billion. While sales did come in roughly $30 million higher than the midpoint analyst target, revenue for the period was still down roughly 17% year over year.

In conjunction with the earnings release, Lumen also announced a major financing move. The company published a press release yesterday stating that it had reached an agreement with creditors who held over $7 billion worth of the company's debt. Per the deal, a large portion of the outstanding debt will now come due at a later date and potential issues with Lumen's compliance with debt covenants will be remedied. The group of creditors will also provide $1.2 billion in new financing.

Is Lumen stock a buy?

With today's pullback, Lumen stock has lost roughly 80% of its value year to date. It trades at roughly 3.7 times this year's expected earnings and less than 8% of this year's expected sales.

LUMN PE Ratio (Forward) Chart

LUMN PE Ratio (Forward) data by YCharts

While the telecom looks cheaply valued by some metrics, it's uncertain whether its turnaround initiatives will be successful. With the company pushing credit maturities further out and taking on new debt, its interest expenses will likely continue to climb. If the business can make significant progress toward management's long-term performance targets, shares could rebound well above current levels. But with recent business performance and a complicated financial structure, the stock is a risky proposition despite trading at low multiples.

10 stocks we like better than Lumen Technologies
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Lumen Technologies wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 30, 2023

There was a problem reaching the disclosure generator. Please try again.

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.

More from The Globe

watchlist
25 stocks most added to Watchlists