Is CenturyLink Stock a Good Option for Investors?

On Tuesday, CenturyLink (NYSE:CTL) stock rose 14.5% and closed at $9.95 with a market cap of $10.8 billion. CenturyLink’s stock price has fallen 8.4% in the trailing five-day period, while it has fallen 18.2% in the trailing 12-month period. The stock is trading 35.0% below its 52-week high of $15.30 on February 12, 2020. The stock was also trading 21.9% above its 52-week low of $8.16 on March 23, 2020. On a YTD (year-to-date) basis, the stock has fallen by 24.7% as of Tuesday.

The Dow Jones Industrial Average and the S&P 500 rose 11.4% and 9.4% on Tuesday, respectively.

Analysts’ recommendations for CenturyLink stock

As of Tuesday, 15 analysts cover CenturyLink stock. Among the analysts, two or ~13.3% of the analysts recommend a “buy,” seven or ~46.7% recommend a “hold,” and six or ~40.0% recommend a “sell.” Analysts have an average target price of $13.10 on CenturyLink. The target price implies a return of 31.7% based on the closing price of $9.95 on Tuesday. The consensus target price for the stock has fallen from $13.25 in February—a fall of 1.1%. The highest target price estimate is $16, while the lowest is $10.

CenturyLink stock got a jolt today. At 10:16 AM ET, the stock was trading 9.1% lower at $9.04. Citi analyst Michael Rollins downgraded the stock to “sell” from “neutral.” The analyst decreased its target price on the stock from $13 to $6. According to a report from TheFly, “The analyst sees rising risks to the business wireline market over the next two years given the spread of COVID-19 and the potential for economic weakness or recession to follow.” The report also said, “While CenturyLink has been investing to take share in the business market and may see an initial benefit from demand for VPN and remote work solutions, the company will face financial headwinds and dilution during the second half of 2020 and peak negative impacts during 2021.”

Financial performance

In the fourth quarter of 2019, CenturyLink reported sales of $5.57 billion with an adjusted EPS of $0.33. The sales fell 3.6% YoY (year-over-year) in the fourth quarter. The company’s Enterprise segment reported revenue of $1.56 billion—a fall of 0.2% YoY. Meanwhile, the company’s Consumer segment reported revenue of $1.4 billion—a fall of 5.5% YoY. Analysts expected the company to post sales of $5.55 billion and earnings of $0.33 in the fourth quarter.

Analysts expect CenturyLink’s revenues to fall by 3.2% in fiscal 2020 to $21.7 billion. The sales will likely fall by 2.4% in fiscal 2021 to $21.2 billion. Analysts expect the company to post an adjusted EPS of $1.43 and $1.54 in fiscal 2020 and 2021, respectively.

CenturyLink’s stock performance

CenturyLink stock closed 7.6% below its 20-day moving average of $10.77 on Tuesday. However, the stock was 21.6% and 25.1% below its 50-day and 100-day moving averages of $12.69 and $13.28, respectively. The company’s 14-day MACD is -0.84, which indicates a downward trading trend. With a 14-day RSI (relative strength index) score of 41.7, the stock isn’t oversold or overbought.

CenturyLink has an upper Bollinger Band level of $13.54. The company’s middle Bollinger Band level is $10.95, while its lower Bollinger Band level is $8.36. On Tuesday, the stock closed near its middle Bollinger Band level, which also indicates that it isn’t oversold or overbought.

Currently, CenturyLink stock is trading at 6.97x its fiscal 2020 estimated EPS of $1.43. The stock is trading at 6.48x its fiscal 2021 estimated EPS of $1.54. Wall Street analysts expect CenturyLink’s earnings to rise at a CAGR of 6.9% over the next five years.

At the end of Tuesday, CenturyLink’s dividend yield was 10.05%. Read CenturyLink Stock Falls after Its Q4 Earnings Results to learn more.