Earnings season is in full swing, with huge numbers of companies having already given their latest numbers to investors. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news.

Let's turn to CenturyLink (NYSE:CTL). The rural telecom company has taken big steps toward broadening its business and avoiding the potential for slow extinction from an eroding customer base. Let's take an early look at what's been happening with CenturyLink over the past quarter and what we're likely to see in its quarterly report on Wednesday.

Stats on CenturyLink

Analyst EPS Estimate

$0.68

Change From Year-Ago EPS

17%

Revenue Estimate

$4.59 billion

Change From Year-Ago Revenue

(1.4%)

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

Will CenturyLink call up profits this quarter?
Analysts have warmed up to CenturyLink this quarter, raising their earnings-per-share estimates by $0.06 over the past three months and bucking the trend of its industry peers. The stock has also performed well, rising more than 7% since early November.

Investors have tended to lump CenturyLink in with Windstream (NASDAQ:WIN), Frontier Communications (NASDAQ:FTR), and other high-dividend telecoms that have a major presence outside urban areas. Like Windstream and Frontier, CenturyLink services plenty of customers with less modern services like traditional landlines that bring in regular revenue but don't have the higher margins that more modern offerings like broadband and wireless connectivity offer.

But CenturyLink has shown great promise from its efforts to diversify its business into more profitable niches. Its purchase of SAVVIS two years ago pushed CenturyLink into the data services business, and that has proven a prescient move as tech giant IBM has made big data-related business expansion a core part of its overall growth strategy.

In CenturyLink's coming report, the key to look for is whether free cash flow continues to outpace its sizable dividend payout. As long as the company can combine its attractive yield with the potential for growth, it will maintain an edge over its competition.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of IBM. 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.