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Update: Level 3 Q4 2014 Results Don't Justify Valuation

Before the market open on Wednesday, Level 3 Communications (LVLT) reported Q4 results that included the first look into the combination of TW Telecom. For the national telecommunications company, the quarterly results capped a successful year of transitioning to a profitable company and preparing for a future of positive free cash flow generation. With the stock jumping roughly 4% in early trading, investors are now faced with the dilemma of paying stock prices not seen since the internet bubble for a stock trading at lofty valuations.

The Q4 numbers are generally messy due to including two months of results from TW Telecom after the merger completed on October 31. The general consensus is that Level 3 beat analyst EPS estimates for Q4 by $0.04 and missed revenue by around $60 million. It isn't clear whether analyst numbers correctly included two months of TW Telecom revenue. Regardless, the company guided to… Read More …