Lumen Technologies is a telecommunications company that provides a wide range of communication and network services. The company offers several services such as voice, data, and managed services to business and residential customers, leveraging its extensive fiber network and infrastructure.
Despite its significant network assets, Lumen has faced challenges in its growth strategy and financial performance.
DCF Analysis Indicates Upside Potential
![](https://static4.depositphotos.com/1006698/360/i/600/depositphotos_3601427-stock-photo-telecommunications-tower.jpg)
An updated DCF analysis, based on the lower end of management guidance, a 12% discount rate, and conservative growth assumptions, yields a price target of $1.22, representing a 17% upside from current pricing.
Significant Asset Value
Beyond current operations, Lumen holds substantial real assets that exceed its market cap. As of Q1 2024, Lumen’s Property, Plant, and Equipment (PPE), net of depreciation, was valued at $19.9 billion.
The land, fiber, conduit, plant, central office, and network electronics represent 77% of these assets. With telecom M&A premiums ranging between 30% and 60%, a conservative 20% premium suggests significant undervaluation.
Breakdown of PPE
- Land, fiber, conduit, plant, central office, and network electronics: 77% of assets
- Accounting for cash and debt, the rough value of assets exceeds $2 billion.
Lumen’s Large Subscriber Base
Lumen also has a large subscriber base for fiber, with Raymond James valuing 5G/fiber telecom customers at approximately $520 per customer. A midpoint valuation of $400 per customer suggests a value of $381 million for fiber subscribers alone.
Insider Trading and Valuation Multiples
Insider trading activity has increased significantly, with most transactions being purchases. President Kathleen Johnson notably increased her holdings by 9% with a $960 thousand purchase. Valuation multiples are favorable, with key sales and cash flow ratios well below sector averages, further indicating potential upside.
Downside Risks
The primary risks include a lack of buyers for key assets and a potential guidance miss for 2024. A guidance miss could negatively impact investor confidence and push Lumen’s stock price below $1 from its current $1.06 level, although delisting is unlikely. A reverse stock split is more probable scenario.
Lumen Technologies Warrants a Closer Look
Lumen Technologies is struggling but retains significant core value, particularly in its assets. A DCF analysis on the low end of management guidance presents a price target with 17% upside. The asset portfolio, net of debt, is worth nearly double the current market cap.
Insiders are making substantial stock purchases, and valuation multiples are compelling. Despite the challenges, the potential for a rise in share price is supported by a comfortable margin of safety.
Given the potential for strategic asset sales and a strong asset base, Lumen Technologies presents a compelling case for investment evaluation.
Lumen Technologies Has a Solid Base for Future Growth
![](https://st.depositphotos.com/1968353/2536/i/600/depositphotos_25360787-stock-photo-communication-towers.jpg)
The company’s substantial undervaluation relative to its asset base and the potential for operational improvements provides a solid foundation for future growth.
While risks remain, the overall outlook suggests that Lumen Technologies could see significant value realization in the near to mid-term.
DISCLAIMER
You should read and understand this disclaimer in its entirety before joining or viewing the website or email/blog list of SmallCapStocks.com (the “Publisher”). The information (collectively the “Advertisement”) disseminated by email, text or other method by the Publisher including this publication is a paid commercial advertisement and should not be relied upon for making an investment decision or any other purpose. The Publisher is engaged in the business of marketing and advertising the securities of publicly traded companies in exchange for compensation. The track record, gains, upside, and/or losses mentioned in the Advertisement, if any, should not be considered as true or accurate or be the basis for an investment. The Publisher does not verify the accuracy or completeness of any information included in the Advertisement. While the Publisher does not charge for the SMS service, standard carrier message and data rates may apply. To unsubscribe from receiving promotional text messages to your phone sent via an autodialer, using your phone reply to the sender’s phone number with the word STOP or HELP for help.
The Advertisement is not a solicitation or recommendation to buy securities of the advertised company. An offer to buy or sell securities can be made only by a disclosure document that complies with applicable securities laws and only in the states or other jurisdictions in which the security is eligible for sale. The Advertisement is not a disclosure document. The Advertisement is only a favorable snapshot of unverified information about the advertised company. An investor considering purchasing the securities, should always do so only with the assistance of his legal, tax and investment advisors. Investors should review with his or her investment advisor, tax advisor or attorney, if and to the extent available, any information concerning a potential investment at the web sites of the U.S. Securities and Exchange Commission (the "SEC") at www.sec.gov; the Financial Industry Regulatory Authority (the "FINRA") at www.FINRA.org, and relevant State Securities Administrator website and the OTC Markets website at www.otcmarkets.com. The Publisher cautions investors to read the SEC advisory to investors concerning Internet Stock Fraud at www.sec.gov/consumer/cyberfr.htm, as well as related information published by the FINRA on how to invest carefully. Investors are responsible for verifying all information in the Advertisement. As an advertiser, we do not verify any information we publish. The Advertisement should not be considered true or complete.
The Publisher does not offer investment advice or analysis, and the Publisher further urges you to consult your own independent tax, business, financial and investment advisors concerning any investment you make in securities particularly those quoted on the OTC Markets. Investing in securities is highly speculative and carries an extremely high degree of risk. You could lose your entire investment if you invest in any company mentioned in the Advertisement. You acknowledge that we are not an investment advisory service, a broker-dealer or an investment adviser and we are not qualified to act as such. You acknowledge that you will consult with your own independent, tax, financial and/or legal advisers regarding any decisions as to any company mentioned here. We have not determined if the Advertisement is accurate, correct or truthful. The Advertisement is compiled from publicly available information, which include, but are not limited to, no cost online research, magazines, newspapers, reports filed with the SEC or information furnished by way of press releases. Because all information relied upon by us in preparing an advertisement about an issuer comes from a public source, it is not reliable, and you should not assume it is accurate or complete.
By your subscription to our profiles, the viewing of this profile and/or use of our website, you have agreed and acknowledged the terms of our full disclaimer and privacy policy which can be viewed at the following link: www.SmallCapStocks.com/Disclaimer and www.SmallCapStocks.com/Privacy-Policy
By accepting the Advertisement, you agree and acknowledge that any hyperlinks to the website of (1) a client company, (2) the party issuing or preparing the information for the company, or (3) other information contained in the Advertisement is provided only for your reference and convenience. The advertiser is not responsible for the accuracy or reliability of these external sites, nor is it responsible for the content, opinions, products or other materials on external sites or information sources. If you use, act upon or make decisions in reliance on information contained in any disseminated report/release or any hyperlink, you do so at your own risk and agree to hold us, our officers, directors, shareholders, affiliates and agents harmless. You acknowledge that you are not relying on the Publisher, and we are not liable for, any actions taken by you based on any information contained in any disseminated email or hyperlink.
![Elizabeth Monroe](https://smallcapstocks.com/wp-content/uploads/2024/01/image-16-150x150.png)
I’m Elizabeth Monroe, a writer who brings you stories from around the world. I’m passionate about sharing important global news and amplifying the voices of those often left unheard. Through my writing, I aim to make the world feel a bit closer and more accessible.