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Level 3 Communications: The Most Important Takeaway From Earnings

Level 3 Communications (LVLT) traded with volatility after reporting earnings, but has since reversed from lower to trade higher by nearly 6% in the two days following the announcement. Since January 2014, shares have soared 65% behind accelerated revenue growth and profits that continue to surge. Looking ahead, investors should expect more of the same, and for one big reason.

That reason is Level 3's free cash flow, and the continued cash flow gains that the acquisition of TW Telecom will create. Combining Level 3 and TW Telecom is more than two companies with mid-single digit revenue growth, but rather leveraging two companies with highly valuable assets that will only increase in value with time. That asset is fiber.

Fiber is what's used to provide the fastest possible mobile and internet solutions. After Level 3 acquired Global Crossing several years back, it gained one of the world's most sophisticated… Read More …