Income investors know the highs of owning CenturyLink (NYSE:LUMN). Shares of the second-largest U.S. communications provider to global enterprise customers are yielding an eye-popping 10.9% at the moment. Growth investors know all about the lows. The stock has moved lower for three consecutive years, shedding 58% of its value in the process before accounting for the chunky distributions. 

Things are playing out differently this year. CenturyLink is making headway in the integration of the $25 billion Level 3 Communications acquisition that it completed last year. CenturyLink jacked up its outlook for adjusted EBITDA and free cash flow for all of 2018 at the time of its second-quarter report nearly three months ago. After three years of pain, it seems as if CenturyLink is finally satisfying income and growth investors. The next big test will come next week when CenturyLink steps up with its third-quarter financials. 

A female CenturyLink sales rep at an office.

Image source: CenturyLink, Inc.

Making the right connection

Analysts see CenturyLink checking in with $5.88 billion in revenue for the third quarter, 46% ahead of where it was a year earlier. Pinch yourself. This may be the third quarter in a row that CenturyLink's top line lands at least 40% ahead of a year earlier, but this is just Level 3's contribution padding top-line results when pitted against the prior year's reported financials. The results will be far less impressive on a pro forma basis.

Combined revenue declined 2% in CenturyLink's previous quarter, a more realistic comparison than the 44% year-over-year pop. There was a slight dip from its business and consumer segments. Flattish pro forma results won't be a deal breaker -- especially if CenturyLink is cashing in on synergies to help prop up its bottom line -- and that's where CenturyLink will have to earn its keep. Adjusted earnings are expected to clock in at $0.30 a share in next week's report. CenturyLink routinely fell short of Wall Street profit targets during the stock's slide from 2015 through 2017, and it's probably not a coincidence that the shares ascending this year are on the heels of CenturyLink beating analyst bottom-line forecasts in back-to-back quarters coming into next Thursday's report. 

There is naturally room for improvement. CenturyLink's dividend has been locked at $0.54 a share since 2013, but you have to go all the way back to 2010 to find the last year that it earned more than its payout, according to data provided by S&P Global Market Intelligence. A dividend hike isn't coming anytime soon, but profitability will have to keep improving for the current distributions to remain sustainable. 

CenturyLink also announced that its CFO was moving on last month. Sunit Patel resigned after accepting a position at T-Mobile to head up its merger and integration division, a smart call given CenturyLink's success at injecting Embarq, Qwest, and now Level 3 into its bloodstream. Wall Street was generally fine with the move, and Scott Goldman at Jefferies put out an encouraging note after speaking to the interim CFO. The cost-cutting playbook isn't likely to change, but we'll see what CenturyLink has to say next week. 

There are still more than a few unknowns, so we can't tag CentryLink as the next millionaire maker. Revenue growth will need to eventually move in the right direction to woo back growth investors, and improving its bottom line is essential to keeping income investors satisfied. The good news is that CenturyLink is showing signs of turning the corner, something that lesser regional telcos have failed to do. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.