Level 3 Communications
The 10-second takeaway
For the quarter ended June 30 (Q2), Level 3 Communications missed slightly on revenues and missed expectations on earnings per share.
Compared to the prior-year quarter, revenue dropped slightly. Non-GAAP loss per share shrank. GAAP loss per share contracted.
Gross margins increased, operating margins shrank, net margins grew.
Level 3 Communications booked revenue of $1.57 billion. The 14 analysts polled by S&P Capital IQ predicted a top line of $1.59 billion on the same basis. GAAP reported sales were 1.3% lower than the prior-year quarter's $1.59 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
EPS came in at -$0.08. The 14 earnings estimates compiled by S&P Capital IQ averaged -$0.07 per share. Non-GAAP EPS were -$0.08 for Q2 versus -$0.21 per share for the prior-year quarter. GAAP EPS were -$0.11 for Q2 versus -$0.29 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures are normalized by S&P Capital IQ and may vary to maintain comparability with normalized estimates.
For the quarter, gross margin was 60.6%, 150 basis points better than the prior-year quarter. Operating margin was 8.9%, 80 basis points worse than the prior-year quarter. Net margin was -1.5%, 240 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $1.60 billion. On the bottom line, the average EPS estimate is $0.03.
Next year's average estimate for revenue is $6.39 billion. The average EPS estimate is -$0.19.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 1,815 members out of 1,948 rating the stock outperform, and 133 members rating it underperform. Among 224 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 198 give Level 3 Communications a green thumbs-up, and 26 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Level 3 Communications is hold, with an average price target of $24.17.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month. The Motley Fool has no position in any of the stocks mentioned. 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.