Why Level 3 Communications, Inc. Popped Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of communications network Level 3 Communications  (NYSE: LVLT  ) popped 10% today after its quarterly results and outlook impressed Wall Street.

So what: The stock has soared over the past year on improving fundamentals, and today's Q4 profit swing -- EPS of $0.06 versus a year-ago loss of $0.23 -- coupled with upbeat guidance only reinforces that trend. While revenue slipped about 1% to $1.6 billion, gross margins increased 200 basis points to 61.4%, suggesting that management is positioning the company well for prolonged profitability.

Now what: Management now expects 2014 EBITDA to increase 11%-14% over the year-ago period on revenue growth of more than 3%. "In 2014, we look forward to building on the strong foundation for growth in revenue, Adjusted EBITDA and free cash flow that we laid in 2013," said CFO Sunit Patel. "Overall for the full year 2014, we expect CNS revenue growth to be higher than the 2.9 percent growth we saw for the full year 2013, on a constant currency basis."

Of course, when you couple Level 3's still-hefty debt load with its red-hot stock price, waiting for a wider margin of safety before buying that bullishness seems prudent.

More great ways to grow
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his six carefully chosen picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2825106, ~/Articles/ArticleHandler.aspx, 10/25/2014 3:24:14 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement