Level 3 Communications, Inc. (LVLT - Snapshot Report) reported fourth quarter 2014 earnings (on a consolidated basis, i.e including the erstwhile tw telecom’s financial numbers for two months) of 35 cents per share, which outpaced the Zacks Consensus Estimate of 33 cents. The acquisition was completed on Oct 31, 2014. Including special items, the company reported earnings of 21 cents per share compared with 6 cents earned in the year-ago quarter.

Level 3 Communications Inc. - Earnings Surprise | FindTheBest

Revenues (on a consolidated basis) grew 19.5% year -over -year to $1.91 billion, but fell short of the Zacks Consensus Estimate of $1.95 billion.

On a stand-alone basis, Core Network Services revenues grew 5% to $1.5 billion in the final quarter of 2014. Geographically, North America generated approximately $1.1 billion, up 6% year over year (in constant currency). EMEA recorded $218 million revenues, up 1%, while Latin America contributed $191 million, up 4% (in constant currency). Wholesale Voice services and Other revenues were approximately $137 million, down 13.8% year over year. Adjusted EBITDA (excluding acquisition-related expenses) climbed 5% to $470 million in the final quarter of 2014.

On a standalone basis, Level 3 Communications generated free cash flow of $325 million in 2014, as opposed to ($47) million at the end of 2013.  Free cash flow generated in 2014 was above the company’s forecasted range of $250 million to $300 million. Capital expenditure in 2014 comprised 13% of revenues. On a consolidated basis, the company exited 2014 with cash and cash equivalents of $580 million.

The company expects to perform well in 2015 buoyed by the acquisition of tw telecom. Level 3 Communications expects to generate free cash flow in the range of $550 million to $600 million for 2015.
 
Zacks Rank

Level 3 Communications currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the same space include Vonage Holdings Corporation (VG - Snapshot Report), Swisscom AG (SCMWY) and TalkTalk Telecom Group PLC (TKTCY). While Vonage Holdings sports a Zacks Rank # 1 (Strong Buy), both Swisscom and TalkTalk Telecom Group carry a Zacks Rank #2 (Buy).