CenturyLink: A Cigar Butt To Buy [telecom]

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By Rui Ma, CFA

Summary

• CenturyLink is a loser this year, thus is likely oversold by institutional investors for a tax deduction.

• The dividend yield is at 15% and its financials supports its current dividend schedule.

• The market value of the stock is at a 40% discount compared to its peers.

• The COO and soon-to-be CEO, Jeff Storey, would likely make this business a turnaround.

CenturyLink's (CTL) business before its Level 3 acquisition had been in bad shape. The steady decline of revenue, adjusted EBITDA and the number of subscribers makes it obvious that the company struggles to keep its customers. Based on dozens of YouTube videos made by their users complaining about their customer services, the problems seem to be mainly in the company operation and management.