Tuesday, May 27, 2014
CenturyLink: Attractive Free Cash Flow Machine
The provider of local data and voice services might have limited growth prospects, but CenturyLink (NYSE: CTL ) continues to innovate to maintain high levels of free cash flow, or FCF. The stock has recently surged following strong earnings and vindication that the large stock-buyback plan is paying off.
The company is shifting from legacy voice services to strategic products of high-speed Internet, Prism TV, and managed hosting services. The move isn't as much geared toward reinvigorating growth as stabilizing earnings and FCF potential. The other similar local telecom providers of Frontier Communications (NASDAQ: FTR ) and Windstream Holdings (NASDAQ: WIN ) sit in a similar situation, attempting to trade legacy revenue for new strategic products to maintain cash flow. Are investors starting to warm up to the sustainability of this model?
Read the full article here.
Disclosure: Long CTL. Please read disclaimer page for more details.