Lumen Technologies has significant liabilities amounting to $20.1 billion, resulting in a high debt-to-equity ratio of 2.33. This suggests that the company heavily relies on borrowed funds to finance its operations. However, Lumen's current ratio stands at 2.0, which is considered healthy for its sector. It's essential to evaluate Lumen's debt in conjunction with its cash reserves and equity to get a clearer picture of its financial health. Overall, while the company leans on debt, its liquidity position appears stable.
Primary Takeaways
Investing in Lumen Technologies stock could be a high-stakes game, especially with upcoming debt obligations totaling
20.1B that may impact its financial stability. With a net income loss of
10.3B from continuing operations, investors should weigh the potential for recovery against the risks of leveraging in a volatile telecom market.
Lumen Technologies financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Lumen Technologies, including all of Lumen Technologies's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Lumen Technologies assets, the company is considered highly leveraged. Understanding the
composition and structure of overall Lumen Technologies debt and outstanding corporate bonds gives a good idea of
how risky the capital structure of a business is and if it is worth investing in it. Please read more on our
technical analysis page.
Understanding Lumen Total Debt
Lumen Technologies liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Lumen Technologies has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Lumen Technologies balance sheet include debt obligations and money owed to different Lumen Technologies vendors, workers, and loan providers. Below is the chart of Lumen main long-term debt accounts currently reported on its balance sheet.
You can use Lumen Technologies
financial leverage analysis tool to get a better grip on understanding its financial position
How important is Lumen Technologies's Liquidity
Lumen Technologies
financial leverage refers to using borrowed capital as a funding source to finance Lumen Technologies ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Lumen Technologies financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Lumen Technologies' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Lumen Technologies' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Lumen Technologies's total debt and its cash.
Breaking it down
The entity reported the previous year's revenue of 14.56
B. Net Loss for the year was (10.3
B) with profit before overhead, payroll, taxes, and interest of 9.61
B.
Liabilities Breakdown
Total Current Liabilities
15.3 B
Non Current Liabilities Total
3.2 B
Non Current Liabilities Other
| Total Current Liabilities | 2.25 Billion |
| Liabilities And Stockholders Equity | 24.67 Billion |
| Non Current Liabilities Total | 15.28 Billion |
| Non Current Liabilities Other | 3.18 Billion |
In the world of finance, timing is everything, and Lumen Technologies is at a pivotal moment as it approaches significant debt obligations this September.
With a current ratio of 2.04X, the company appears to have a solid buffer to meet its short-term liabilities, which total $3.5 billion. However, the looming long-term debt of $19.8 billion, coupled with a staggering probability of bankruptcy at 72.76%, raises concerns about its financial health. Despite generating $14.6 billion in revenue, Lumen reported losses in free cash flow amounting to 940 million, indicating that cash generation remains a challenge. Investors should closely monitor how the company navigates these upcoming obligations, as it could unlock or further hinder its potential value in the telecom sector..
Our perspective of the recent Lumen Technologies roll up
Lumen Technologies is attracting investor interest, especially with its stock price around $10.48, which may indicate a period of reduced volatility. This stabilization could present a good opportunity for those looking to benefit from the company's strategic initiatives. As Lumen undergoes its transformation, the market's reaction to this price point might uncover growth opportunities, making it an appealing choice for investors interested in a company in transition.
Currently, Lumen's stock shows above-average volatility, which can help investors time their trades. By using volatility indicators, traders can assess Lumen's risk compared to overall market trends. Increased volatility during bear markets can affect Lumen's stock price, often leading investors to adjust their portfolios as they respond to falling prices.Investing in Lumen Technologies presents a mixed bag of opportunities and risks as we head into September.
With a market value of
5 billion and an overall analyst consensus rating of "Hold," investors should approach this stock with caution. The estimated target price ranges from a low of
2.13 to a high of
2.6, suggesting limited upside potential in the near term. While the hype value stands at 5.43, indicating some investor interest, the reality is that Lumen's performance may not align with expectations. As the fiscal year ends in December, keeping an eye on upcoming developments will be crucial for those considering this stock. Balancing potential gains against the current valuation could lead to a more informed investment decision..
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Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Lumen Technologies. Please refer to our
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