LUMN - Lumen Technologies: Why I Don't Buy Its Turnaround Plan
2024-06-05 15:39:55 ET
Summary
- Lumen Technologies (LUMN) stock has very negative quant ratings.
- Such ratings are well supported given its poor profit outlook, stretched balance sheet, and highly uncertain turnaround plan.
- The current cheap valuation is only in terms of topline-driven metrics.
- With no net profit in sight for years, I do not consider the valuation cheap at all.
LUMN stock: quant ratings are so negative for good reasons
About a year ago, I wrote a few articles on Lumen Technologies ( LUMN ) stock (see the chart below) to caution potential investors about the dangers lurking behind the cheap valuation and high yield. At that time, the stock was trading around $1.80 per share and an FY1 P/E of 4.6x. Despite such beaten down prices and valuation ratios, my top concerns at that time were twofold:
Lumen Technologies: Why I Don't Buy Its Turnaround Plan
I am concerned about LUMN’s outlook for both the top and bottom lines ahead. LUMN is suffering from a high leverage ratio and structural underinvestment.