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What to Expect from CenturyLink in Q4

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On Tuesday, CenturyLink (NYSE:CTL) stock rose 0.81% and closed at $14.93 with a market capitalization of $16.3 billion. The stock is trading 2.35% below its 52-week high of $15.29 and 54.9% above its 52-week low of $9.64. Notably, the stock has also returned 13.0% YTD (year-to-date). In comparison, the S&P 500 Index has gained about 3.93% YTD.

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CenturyLink’s Q4 expectations

CenturyLink will report its fourth-quarter earnings results after the market closes today. Wall Street analysts expect CenturyLink to report sales of $5.5 billion in the fourth quarter. The figure would mark a fall of 4.0% YoY (year-over-year) compared to $5.8 billion in the fourth quarter of 2018. Analysts also expect the company to report an adjusted EPS of $0.33 in the fourth quarter compared to $0.37 in the fourth quarter of 2018.

Analysts’ recommendations and target prices

Currently, about 15 Wall Street analysts cover CenturyLink stock. Among the analysts, two recommend a “buy,” ten recommend a “hold,” and three recommend a “sell.” Analysts’ mean target price on the stock is $13.02, which implies a 12.8% loss from the current level of $14.93. The lowest target price estimate is $10, while the highest is $16.00.

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CenturyLink’s valuation

Currently, CenturyLink stock is trading at 10.19x its fiscal 2020 estimated adjusted EPS of $1.46. The stock is also trading at 9.85x its fiscal 2021 estimated adjusted EPS of $1.52. Analysts expect CenturyLink’s earnings to rise at a compound annual growth rate of 7.40% in the next five years.

Technical level

Based on the closing price on Tuesday, CenturyLink stock was trading 5.0% above its 20-day moving average of $14.22. The stock is also trading 8.4% above its 50-day moving average of $13.77 and 10.8% above its 100-day moving average of $13.47.

CenturyLink’s 14-day relative strength index score is 64. The score suggests that the stock isn’t overbought or oversold. The stock’s upper, middle, and lower Bollinger Band levels are $15.38, $14.22, and $13.05, respectively. On Tuesday, the stock ended close to its upper Bollinger Band level. The level suggests that the stock is overbought.

In the third quarter of 2019, CenturyLink’s free cash flow fell 15.6% YoY to $931 million. The company’s operating cash flow increased by 5.7% YoY to $1.9 billion. CenturyLink’s capital expenditures rose 39.9% YoY to $957 million in the third quarter of 2019. CenturyLink returned $275 million to shareholders in the form of dividends during the same quarter. On Tuesday, the company’s dividend yield was 6.70%.

Read Will CenturyLink Stock Rally More on $1.6 Billion IT Order? to learn more.

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