CTL  Centurytel Inc.

Exchange

NYSE

Sector

Public Utilities

Industry

Telecommunications Equipment

Market Cap.

12.31B

Vuru Grade

48.67/100

Current Price

$22.52
-0.09 (-0.40%)

Growth Price

$59.60
Undervalued by 164.64%

Company Metrics

  • P/E 19.41
  • P/S 0.71
  • P/B 0.92
  • EPS 1.16
  • Cash ROIC 5.12%
  • Cash Ratio 0.04
  • Dividend 2.16 / 9.49%
  • Avg. Vol. 7.92M
  • Shares 546.63M
  • Market Cap. 12.31B

Company Description

CenturyLink, Inc., together with its subsidiaries, operates as an integrated communications company. The company provides a range of communications services, including local and long distance voice, wholesale network access, high-speed Internet access, other data services, and video services in the continental United States. Its services include local exchange and long distance voice telephone ser... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Morgan Stanley Resumes CenturyLink, Inc. (CTL) at Overweight
StreetInsider.com - 6 hours ago
Morgan Stanley resumes coverage on CenturyLink, Inc. (NYSE: CTL) with a Overweight rating and a price target of $27.00.
Morgan Stanley Reiterates Overweight Rating for Centurylink Inc (CTL) - Sports Perspectives
Boeing, Centurylink, Methanex - Times of India
Incompas argues CenturyLink/Level 3 combo won't promote competition
Seeking Alpha - 19 hours ago
Industry group Incompas is expressing concern that a planned (and shareholder-approved) merger between CenturyLink (CTL -0.4%) and Level 3 (LVLT -0.1%) won't promote competition in fiber-based business services.
What Centurylink and Level 3 Shareholders' Approval Means for Their Merger - Motley Fool
Stock Jumping Abnormally High: CenturyLink, Inc. (CTL)
HugoPress - 4 hours ago
Moffett Nathanson Initiates Coverage On CenturyLink, Inc. (CTL)'s stock to Neutral with the price target of $23.
CenturyLink, Inc.
Seeking Alpha - Feb 27, 2017
As previously disclosed, CenturyLink, Inc. (the “Company” or “CenturyLink”) has agreed to appoint to its board of directors, on or prior to the closing date of the Company's pending acquisition (the “Combination”) of Level 3 Communications, Inc ...
Buy or Sell? What Analysts Recommends: CenturyLink, Inc. (CTL), The Dow ...
StockNewsJournal - Mar 27, 2017
CenturyLink, Inc. (NYSE:CTL), maintained return on investment for the last twelve months at 1.48, higher than what Reuters data shows regarding industry's average.
Investor's Alert: The Dow Chemical Company (DOW), CenturyLink, Inc. (CTL) - TRA
CenturyLink, Inc. subtracted -0.4% in its Stock Price in the Previous Trading ...
Free Observer - 5 hours ago
Currently the shares of CenturyLink, Inc. (CTL) has a trading volume of 7.33 Million shares, with an average trading volume of 8.16 Million shares - with shares dropping to a 52 week low of $22.33 on Mar 28, 2017, and the company's shares hitting a 52 ...
Vetr Inc. Upgrades Centurylink Inc (CTL) to Strong-Buy - The Cerbat Gem
Stock Showing Surging Activity: CenturyLink, Inc. (CTL) - HugoPress
CenturyLink, Inc. (CTL) Ex-Dividend Date Scheduled for March 01, 2017
Nasdaq - Feb 28, 2017
CenturyLink, Inc. ( CTL ) will begin trading ex-dividend on March 01, 2017. A cash dividend payment of $0.54 per share is scheduled to be paid on March 17, 2017.
MoffettNathanson Starts CenturyLink, Inc. (CTL) at Neutral - StreetInsider.com
CenturyLink Inc. (CTL) Moves Lower on Volume Spike for February 28 - Equities.com
Is It Time To Sell CenturyLink?
Seeking Alpha - Mar 7, 2017
CenturyLink's (NYSE:CTL) $34 billion deal (including debt) to buy Level 3 Communications (NASDAQ:LVLT) didn't come as a surprise, as the sector is slowing and requires takeovers to keep an advantage in market share.
5 Things CenturyLink Management Wants You to Know
Motley Fool - Mar 1, 2017
CenturyLink, Inc. (NYSE:CTL) posted a lackluster quarter [opens in PDF] in early February, and its forward guidance wasn't too impressive either.
CenturyLink Inc. (CTL) Moves Higher on Volume Spike for March 01 - Equities.com
Dividend Growth Analysis of CenturyLink, Inc. (CTL) - Energy Index
The Charts For CenturyLink, Inc. (CTL) Is Speaking Volumes Today
NY Stock News - Mar 28, 2017
CenturyLink, Inc. (CTL) has presented a rich pool of technical data in recent sessions. These are the trends we've been tracking and how we feel they should be played in the current environment.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for CTL to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate CTL's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$22.52 Current Price

$59.60 Growth Price (DCF)

Undervalued by 164.64%


Growth Rate Assumed by Market: -500.00%


Future Free Cash Flow Growth Rate: 15.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$25.35 Book Price

Undervalued by 12.59%


Poor Cash Return on Invested Capital over the past 5 years

CTL has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

CTL has only created $5.12 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 3.15B 2.51B 2.14B 2.28B 1.63B
divided by
Invested Capital 49.21B 47.21B 46.10B 42.87B 41.45B
Cash ROIC 6.39% 5.32% 4.64% 5.32% 3.93%

Poor Return on Equity over the past 5 years

CTL has shown an inability to deliver strong results for shareholders. This could be due to poor management, CTL operating in a highly competitive industry, or having a weak business in general.

CTL has only generated $3.74 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 777.00M -239.00M 772.00M 878.00M 626.00M
divided by
Stockholders' Equity 19.29B 17.19B 15.02B 14.06B 13.40B
Return on Equity 4.03% -1.39% 5.14% 6.24% 4.67%

Excellent Business Performance over the past 10 years

CTL has been able to maintain profitability in good times and bad. This could mean CTL has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

CTL has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 703.94M 566.48M 817.17M 1.18B 1.79B 3.15B 2.51B 2.14B 2.28B 1.63B

Weak Balance Sheet

CTL's financial position is not ideal. The key is to check whether CTL is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 34.40M 243.33M 161.81M 172.94M 128.00M 211.00M 168.00M 128.00M 126.00M 222.00M
Current Assets 292.40M 555.41M 1.12B 1.14B 3.52B 3.61B 3.91B 3.58B 2.65B 5.16B
Total Assets 8.18B 8.25B 22.56B 22.04B 56.14B 54.02B 51.79B 50.15B 47.60B 47.02B
Current Liabilities 736.54M 458.39M 1.71B 1.01B 4.02B 4.60B 4.41B 3.92B 4.60B 5.35B
Total Liabilities 4.78B 5.09B 13.10B 12.40B 35.31B 34.73B 34.60B 35.12B 33.54B 33.62B
Stockholder' Equity 3.41B 3.16B 9.46B 9.64B 20.83B 19.29B 17.19B 15.02B 14.06B 13.40B
Current Ratio 0.40 1.21 0.66 1.13 0.88 0.79 0.89 0.91 0.58 0.97
TL-to-TA 0.58 0.62 0.58 0.56 0.63 0.64 0.67 0.70 0.70 0.72

Low or No Reinvestment of Profits over the past 10 years

CTL has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to CTL operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 3.25B 3.15B 3.23B 3.30B 2.32B 1.29B 66.00M 147.00M 272.00M -1.00M
Retained Earnings Growth - -3.05% 2.75% 2.16% -29.78% -44.59% -94.86% 122.73% 85.03% -100.37%

Competitive Industry over the past 10 years

CTL is likely operating in an industry with medium to low barriers to entry. This may mean that CTL doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that CTL invests heavily in R&D and Sales, General & Administrative expenses.

Only $7.30 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 418.37M 365.73M 511.25M 947.71M 573.00M 777.00M -239.00M 772.00M 878.00M 626.00M
divided by
Revenue 2.66B 2.60B 4.97B 7.04B 15.35B 18.38B 18.10B 18.03B 17.90B 17.47B
Net Profit Margin 15.75% 14.07% 10.28% 13.46% 3.73% 4.23% -1.32% 4.28% 4.91% 3.58%

Strong Pricing Power over the past 10 years

CTL has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. This potentially leaves flexibility in inflationary environments to raise prices on consumers and maintain profitability.

$64.40 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 1.72B 1.64B 3.22B 4.63B 15.35B 10.74B 10.59B 10.19B 10.12B 9.70B
divided by
Revenue 2.66B 2.60B 4.97B 7.04B 15.35B 18.38B 18.10B 18.03B 17.90B 17.47B
Gross Margin 64.71% 63.25% 64.78% 65.77% 100.00% 58.43% 58.51% 56.49% 56.55% 55.50%

High Capital Intensity over the past 10 years

CTL spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

265.55% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 326.05M 286.82M 756.54M 863.77M 2.41B 2.92B 3.05B 3.05B 2.87B 2.98B
divided by
Net Income 418.37M 365.73M 511.25M 947.71M 573.00M 777.00M -239.00M 772.00M 878.00M 626.00M
Capital Expenditure Ratio 77.93% 78.42% 147.98% 91.14% 420.77% 375.68% -1,275.31% 394.69% 327.11% 476.20%

Very Strong Dividend History over the past 10 years

CTL has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests CTL is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 29.05M 220.27M 560.70M 878.01M 1.56B 1.81B 1.30B 1.23B 1.20B 1.17B
divided by
Shares Outstanding 113.09M 102.87M 199.06M 301.30M 534.12M 622.29M 600.89M 569.74M 555.09M 540.68M
Dividend Paid Per Share 0.26 2.14 2.82 2.91 2.91 2.91 2.17 2.16 2.16 2.16
Price at Year End 30.99 21.07 31.36 43.06 37.20 38.56 31.96 40.09 25.38 23.78
Dividend Yield 0.83% 10.16% 8.98% 6.77% 7.83% 7.55% 6.77% 5.38% 8.50% 9.08%

History of Stock Buybacks over the past 10 years

CTL has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 113.09M 102.87M 199.06M 301.30M 534.12M 622.29M 600.89M 569.74M 555.09M 540.68M
Stock Bought Back - 9.94% -48.32% -33.93% -43.59% -14.17% 3.56% 5.47% 2.64% 2.67%
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Discussion
Sort By:
1
Posted by Mclovin  (on March 25, 2012)
I bought shares in TC.TO because if you look at the past growths etc. i found that they have stayed steady or grew not really dropped
1
Posted by phil.mylant  (on March 26, 2012)
As far as companies like this go, they definitely look like a better buy.

Not the greatest margins but definitely looks more steady / predictable than CTL.
1
Posted by mijul1  (on March 24, 2012)
does anyone have any thoughts on buying ctl?
1
Posted by timholland  (on March 26, 2012)
Honeybadger is right about them decreasing shareholder value. It's worrying. Another thing to consider is that it's a telecom company. That means they have to spend huge amounts on infrastructure to stay competitive. That's where their cash goes.

I also don't like how much debt they've built up on the past few years. Seems like they're gorging on it.

I know it's undervalued but this sort of stuff is concerning.
1
Posted by Honeybadger  (on March 23, 2012)
Yeah, don't. lol Seriously, nice divvy but it's in an industry with limited growth and heavily regulated. Also it appears they have diluted shareholders' value. Looking at the dividends&buybacks tab, it appears they have increased the float drasticly over the past several years.(This may be an accounting anomaly for all I know ie. stock split. Not interested in the company enough to find out. lol)
1
Posted by lunari  (on March 23, 2012)
seems kind of sketchy