CenturyLink (CTL) Hits a 52-Week Low on Weak Q2, View Cut

Shares of CenturyLink, Inc. CTL declined 4.6% yesterday, plunging to a 52-week low of $24.81. However, the company's shares ended a little higher at $25.86, demonstrating a decline of over 23% in the past three months.

Ever since the company reported dismal second-quarter numbers and trimmed its 2015 outlook, its shares have lost around 9.5% value. The company missed both the top and the bottom line of the Zacks Consensus Estimate largely because of persistent pressure on wholesale revenues along with higher employee and benefit costs. Taking these bearish factors into account, the company lowered its outlook for 2015.

For 2015, the company now expects operating revenues in the range of $17.7 billion to $17.9 billion, down from the previous estimate of $17.9–$18.1 billion. The core revenue guidance has also been slashed to the $16.1 billion to $16.25 billion band, below the prior estimate of $16.25–$16.45 billion. Operating cash flow is forecasted between $6.7 billion and $6.85 billion, lower than the prior outlook of $6.8 billion to $7.0 billion. Adjusted earnings per share are projected between $2.35 and $2.55, lower than the company's previous estimate of $2.50 to $2.70.

Additionally, estimate revisions for earnings have exhibited a negative trend. Over the past 60 days, the company witnessed negative estimate revisions for both the current year and third quarter, leading to the Zacks Consensus Estimate moving south by 5% to $2.45 and 10.8% to $0.58, respectively.

Meanwhile, this Zacks Rank #4 (Sell) company is planning to retrench 1,000 employees following its disappointing second-quarter results. However, CenturyLink has not provided details on the news. In 2011, CenturyLink had acquired Denver-based Qwest Communications which has positioned it as the largest landline service provider in the Colorado region. However, in recent times, the company's employee count in Colorado has fallen considerably. As per Denver Business Journal, the company had 7,000 workers in Colorado which declined to 6,900 and 5,800 in 2013 and 2014, respectively.

Stocks to Consider

Better-ranked stocks in the same space include AT&T, Inc. T, Inteliquent, Inc. IQNT and Ruckus Wireless, Inc. RKUS. All these stocks hold a Zacks Rank #2 (Buy).

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