Lumen Technologies: Get a Safe 7% Yield From This Dividend Stock

A revenue miss in Q1 hasn’t impeded Lumen Technologies’ (LUMN) forward charge in 2021. The stock has accrued share gains of 47% so far, and the forward momentum continued after Read More... The post Lumen Technologies: Get a Safe 7% Yield From This Dividend Stock appeared first on TipRanks Financial Blog.

Lumen Technologies: Get a Safe 7% Yield From This Dividend Stock

A revenue miss in Q1 hasn’t impeded Lumen Technologies’ () forward charge in 2021. The stock has accrued share gains of 47% so far, and the forward momentum continued after the company delivered the first quarter’s financials.

Investors were content to overlook soft top-line numbers and instead focus on the bottom-line beat. Specifically, the telecommunications specialist generated revenue of $5.03 billion, amounting to a year-over-year decline of 3.8% and missing the estimates by $30 million. However, net income hit $475 million compared to $314 million in the same period last year, resulting in EPS of $0.44, ahead of the Street’s forecast by $0.06. Additionally, free cash flow more than doubled from $385 million a year ago to $850 million.

Looking ahead, the company reiterated its 2021 guide for Adjusted EBITDA between $8.4-8.6 billion, (compared to 2020’s $8.66 billion) and FCF of $2.8-3.0 billion – Lumen generated $2.98 billion in 2020. While Capex hit $3.7 billion last year, it is expected to come in between $3.5-3.8 billion.

“At the midpoint of FCF guide,” said Wells Fargo’s Eric Luebchow, “The dividend payout ratio implies ~38%, which we view as safe and our conversations with investors has shifted away from the risk to it being cut. Sales have reportedly started to accelerate in March after a slower end to 2020 and the early start to 2021, which we suspect will result in improved 2H over 1H.”

While Luebchow calls the quarter “mixed,” of more interest to the analyst were the noises made by the company regarding “potential strategic divestitures.”

“With residential fiber sale multiples at all-time highs, we see potential for LUMN to accretively sell a stake in its consumer business,” the analyst opined.

Going forward, management has also said it is “considering share buybacks,” and Luebchow thinks if an asset sale is completed, this could happen rather sooner than later.

All in all, Luebchow keeps an Overweight (i.e. Buy) rating on LUMN shares, while boosting the price target from $12.50 to $15. (To watch Luebchow’s track record, )

Mirroring Luebchow’s sentiment is Oppenheimer’s Timothy Horan, who makes similar points.

“With stable FCF, we think the dividend is safe and the 8% current yield is attractive,” the 5-star analyst said. ”The key is to invest in high-growth areas that will improve revenue growth while keeping costs low. Also, we think selling non-core assets and federal broadband subsidies would be catalysts for the stock.”

As such, Horan’s rating stays an Outperform although there’s no change to the $15 price target. (To watch Horan’s track record, )

On Wall Street, however, the two analysts stand out. Of the 3 other recent reviews on record, 2 say Hold and 1 recommends to Sell – all adding up to a Hold consensus rating. The average price target is more downbeat, too, and at $12.75, suggests the shares will decline by 3% from current levels. (See LUMN stock analysis on TipRanks)

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

The post Lumen Technologies: Get a Safe 7% Yield From This Dividend Stock appeared first on TipRanks Financial Blog.

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Aritzia 4Q E-Commerce Revenue Increases 81%

On May 11, Aritzia (ATZ) announced financial results for the fourth quarter and full-year fiscal 2021. The fashion retailer posted lower revenues and profit than a year earlier, as lockdowns Read More... The post Aritzia 4Q E-Commerce Revenue Increases 81% appeared first on TipRanks Financial Blog.

Aritzia 4Q E-Commerce Revenue Increases 81%

On May 11, Aritzia (ATZ) announced financial results for the fourth quarter and full-year fiscal 2021. The fashion retailer posted lower revenues and profit than a year earlier, as lockdowns forced the company to close stores.

Aritzia’s revenue for 4Q 2021 came in at C$267.5 million, a decrease of 2.9% versus the prior-year quarter. The company had to temporarily close 39 out of 101 stores for most of the quarter. eCommerce revenue grew 81.1% relative to 4Q 2020. Adjusted net earnings amounted to C$0.16 per diluted share, down from C$0.21 per diluted share in the fourth quarter of the previous year.

As for full-year fiscal 2021, Aritzia’s revenue came in at C$857.3 million, down 12.6% from the previous fiscal year. The decrease in net sales was primarily due to COVID-19 and the related temporary store closures but was partially offset by growth in e-commerce. eCommerce revenue grew 88.3% to C$425.9 million, or 49.7% of net revenue, due to increased traffic and conversion. Adjusted net income per diluted share amounted to C$0.23, down from C$0.87 in fiscal 2020.

Aritzia’s Founder, Chairman, and CEO Brian Hill said, "We're excited by the strong start to fiscal 2022, on-track to more than double our first-quarter net revenue compared to last year, reflecting a previously unseen acceleration of sales in the United States and continued growth in our eCommerce business. Looking ahead, we are expediting investments across our four key strategic growth drivers: digital innovation of eCommerce and omni, geographical retail expansion, ongoing product development, and brand awareness. We will continue to expand our high-performing team, evolve our processes for even greater efficiency, and enhance our technology to fuel our long-term growth."

For fiscal year 2022, Aritzia expects net revenue growth of 30% to 35% from fiscal year 2021, driven by continued growth in its eCommerce business, continued recovery in retail performance, and contribution from more store openings. (See Aritzia stock analysis on TipRanks)

Last week, Canaccord Genuity analyst Derek Dley reiterated a Buy rating on the stock with a C$35.00 price target for a 15.7% upside potential.

The rest of the Street is bullish on ATZ, with a Strong Buy consensus rating, based on 4 Buys. The average analyst price target of C$36.50 implies an upside potential of 20.6% from current levels. Shares have risen by nearly 20% year-to-date.

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The post Aritzia 4Q E-Commerce Revenue Increases 81% appeared first on TipRanks Financial Blog.

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