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Why Level 3 Communications, Inc. Shares Leapt 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 Level 3 Communications, (NYSE: LVLT  ) jumped nearly 16% Wednesday after the company posted better-than-expected first-quarter results and strong forward guidance.

So what: Quarterly revenue rose 2% year over year, to $1.609 billion, which translated earnings of $0.47 per diluted share. Analysts, on average, were expecting earnings of just $0.28 per share on sales of $1.59 billion. Meanwhile, on a pro forma basis, Level 3's adjusted EBITDA increased 23.5%, to $458 million.

Level 3 also increased guidance for adjusted EBITDA, which is expected to grow 14% to 18% for the full year 2014. By comparison, Level 3 previously saw 11% to 14% growth. In addition, 2014 free cash flow is now expected to be $250 million to $300 million, or a $25 million increase from both the top and bottom ends of Level 3's previous range. 

Now what: All things considered, I think investors have every right to celebrate today's report. If Level 3 Communications can continue grabbing market share and focusing on profitable growth, I see no reason the stock can't continue to reward patient shareholders from here.

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Comments from our Foolish Readers

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  • Report this Comment On April 30, 2014, at 8:07 PM, Curiosiddy wrote:

    Yay! I've been long on LVLT for 5+ years. Glad my patience finally. Paid off. Now I just wish I'd bought more....

  • Report this Comment On April 30, 2014, at 8:12 PM, Curiosiddy wrote:

    Yay! I've been holding this one for 5+ years. Glad I was so patient. Now I just wish I'd bought more....

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Steve Symington

Technology and consumer goods specialist for the Fool. Steve looks for responsible businesses which positively shape our lives. Then, he invests accordingly. Enjoy his work? Connect with him on Twitter & Facebook so you don't miss a thing.

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