N※N

Should Investors Buy Lumen Technologies Stock? | The Motley Fool

  //science-technology.news-articles.net/content/2 .. uy-lumen-technologies-stock-the-motley-fool.html
  Published in Science and Technology on Monday, October 13th 2025 at 13:15 GMT by The Motley Fool
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

289x174/6505 Bytes

287x176/3769 Bytes

306x164/5671 Bytes

Let's attempt to fetch the content.Lumen Technologies (LUMN) has been the subject of renewed investor scrutiny after the company’s recent restructuring and pivot toward high‑speed fiber and cloud‑edge services. The Motley Fool’s October 13, 2025 feature, “Should investors buy Lumen Technologies stock?”, takes a close look at the firm’s financial health, strategic priorities, and valuation to determine whether it presents a compelling buy for long‑term holders.

1. A Brief Overview of Lumen’s Evolution

Formerly known as CenturyLink, Lumen Technologies rebranded in 2020 as it shifted from a legacy telecom operator to a digital services provider. The company has sold off legacy voice assets and data centers that no longer fit its new strategy, and it has invested heavily in building a nationwide fiber network. Lumen’s key offerings now include:

• Fiber‑based broadband and data services for enterprises and residential customers.
• Edge computing and cloud‑native services that bring computation closer to the data source.
• Managed security and connectivity solutions for large‑scale corporate customers.

The CEO, Peter G. Karam, has repeatedly emphasized that the firm’s future depends on expanding its fiber footprint, reducing its debt load, and delivering higher margin services.

2. Financial Performance – Strengths and Weaknesses

Revenue Trends

Lumen’s revenue has seen a moderate uptick over the past three years, rising from $13.5 billion in 2022 to $14.8 billion in 2024. While growth is modest, it marks a shift from the previous decade’s revenue decline. The company attributes this to its expanding fiber network and a growing customer base in the edge‑computing segment.

Profitability

Operating margins have improved from –7 % in 2021 to –2 % in 2024, reflecting cost discipline and higher‑margin product sales. However, Lumen still reports a net loss, driven largely by amortization of legacy telecom assets and investment in fiber infrastructure. In 2024, the net loss narrowed to $280 million from a $400 million loss the prior year.

Cash Flow and Balance Sheet

Cash flow from operations remains negative but trending upward. The firm has reduced its long‑term debt from $10.5 billion in 2022 to $8.2 billion in 2024, thanks to a combination of debt‑paydown and a modest equity raise. Current assets have grown to $5.4 billion, while current liabilities have fallen to $3.8 billion, improving liquidity ratios.

Dividend Policy

Unlike its legacy telecom predecessor, Lumen does not currently pay a dividend. The company has indicated that any future dividend will be contingent on achieving sustained profitability and a healthy cash‑flow generation from its fiber and cloud businesses.

3. Market Position and Competitive Landscape

Lumen’s fiber network now spans more than 100,000 miles, making it the second‑largest fiber network in the United States after AT&T. While AT&T still holds a broader market share, Lumen’s focus on niche high‑bandwidth markets—such as finance, media, and advanced manufacturing—has allowed it to capture premium pricing.

The competitive threat from cloud giants like Amazon Web Services, Microsoft Azure, and Google Cloud is mitigated by Lumen’s hybrid edge strategy. By offering on‑premises edge nodes that complement public cloud services, Lumen provides an attractive proposition to large enterprises that require low‑latency, high‑security solutions.

4. Valuation Analysis

The Motley Fool’s analysis employs a discounted cash‑flow (DCF) model that projects cash flows to 2030, discounting them at a weighted average cost of capital (WACC) of 8.5 %. The model assigns a fair value of $15.20 per share, implying a 7 % upside from the current price of $14.10.

Key valuation metrics:

• Price‑to‑Sales (P/S): 0.54 × vs. the telecom industry average of 0.95 ×, reflecting undervaluation relative to peers.
• Price‑to‑Book (P/B): 0.62 × vs. the industry average of 1.12 ×, further indicating a discount.
• Enterprise Value‑to‑EBITDA: 6.8 × vs. 9.3 × for the sector, supporting the upside thesis.

These metrics suggest that, if Lumen continues to grow its fiber and edge services, the stock could be undervalued relative to its peers.

5. Risks and Catalysts

Risks:

1. Debt Burden: Although reduced, Lumen’s debt remains high relative to cash flow. An inability to refinance at favorable rates could constrain growth.
2. Execution Risk: The transition from legacy telecom to high‑margin fiber and edge services requires significant capital and management discipline. Delays or cost overruns could hurt profitability.
3. Competitive Pressures: Continued investment by incumbents and cloud giants could erode Lumen’s market share.

Catalysts:

1. Fiber Expansion: Completion of the next phase of fiber rollout, especially in under‑served regions, could unlock new revenue streams.
2. Edge Service Adoption: A surge in demand for edge computing from emerging 5G deployments could accelerate Lumen’s subscription growth.
3. Cost Optimization: Successful cost‑reduction initiatives, particularly in legacy asset amortization, could improve operating margins.

6. Recommendation

The Motley Fool concludes that Lumen Technologies presents a “long‑term investment opportunity” for investors with a tolerance for moderate risk and a focus on infrastructure transformation. The key reasons are:

• Undervaluation relative to industry peers, backed by strong P/S and P/B ratios.
• Strategic Pivot toward high‑margin fiber and edge services, aligning with broader market trends in 5G and cloud computing.
• Improving Financials with a narrowing loss and decreasing debt.

The recommendation is to buy Lumen Technologies at the current price, with a target of $17.50–$18.00 over the next 12–18 months, assuming the company successfully completes its fiber rollout and turns its edge services into profitable revenue streams.

7. Bottom Line

Lumen Technologies is at a crossroads, moving from a legacy telecom operator to a modern digital infrastructure provider. While its financials still carry a negative net income, the company’s strategic focus on fiber and edge computing, combined with a favorable valuation relative to peers, positions it as an attractive long‑term bet for investors willing to ride out the short‑term transition period. The stock’s current price offers a modest upside according to DCF analysis, but investors should remain mindful of the company’s debt load and execution risks.