Lumen Technologies Inc (LUMN-N)

Is sliding, but it should never have gone up as much as it did--and will continue to.

Doesn't trust it because of its parabolic moves.

LUMN is down 79% year-to-date and it recently missed its earnings by a wide margin. The company's sales declined year-over-year by 17%, but its operating expenses also rose 14%, causing significant margin contraction. Its operating expenses last year benefited from the sale of its business, and its interest expenses remain high, at $295M in the recent quarter. It has reduced its debt significantly over the past several years, but it remains high at a net debt of ~$20B, and a net debt/EBITDA of 4.0X. Its interest coverage ratio has been materially contracting, now at 1.4X, and it's selling assets and business segments to reduce its debt burden. A bad mix of declining sales, flat to contracting margins, and sales of some of its business units to reduce a debt/equity ratio of 9.0X is likely to negatively impact this name for some time. We do not expect a recovery in this name unless sales can recover, however, it seems the company is focused on restructuring rather than growing.
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