CenturyLink Beats on EPS but GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

CenturyLink (NYS: CTL) reported earnings on May 9. Here are the numbers you need to know.

The 10-second takeaway
 For the quarter ended March 31 (Q1), CenturyLink met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share contracted significantly.


Margins dropped across the board.

Revenue details
 CenturyLink notched revenue of $4.61 billion. The 15 analysts polled by S&P Capital IQ foresaw net sales of $4.61 billion on the same basis. GAAP reported sales were much higher than the prior-year quarter's $1.70 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
 EPS came in at $0.68. The 15 earnings estimates compiled by S&P Capital IQ anticipated $0.58 per share. GAAP EPS of $0.32 for Q1 were 54% lower than the prior-year quarter's $0.69 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
 For the quarter, gross margin was 59.3%, 650 basis points worse than the prior-year quarter. Operating margin was 14.2%, 1,530 basis points worse than the prior-year quarter. Net margin was 4.3%, 810 basis points worse than the prior-year quarter.

Looking ahead
 Next quarter's average estimate for revenue is $4.58 billion. On the bottom line, the average EPS estimate is $0.60.

Next year's average estimate for revenue is $18.27 billion. The average EPS estimate is $2.44.

Investor sentiment
 The stock has a four-star rating (out of five) at Motley Fool CAPS, with 531 members out of 573 rating the stock outperform, and 42 members rating it underperform. Among 170 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 155 give CenturyLink a green thumbs-up, and 15 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on CenturyLink is outperform, with an average price target of $43.39.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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