LUMN — Lumen Technologies

Will it survive?

• Can it pay its interest? -0.6×
  Does not cover its interest
  Operating income ($812M) ÷ interest expense $1.3B

  A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.

• How heavy is the debt? —
  Debt against an operating loss
  Total debt $7.3B · operating income ($812M)

  There's debt but no operating profit to measure it against — understand that combination before anything else about the company.

• How long is cash tied up? -39d
  Negative — funded by others
  DSO 42 + DIO 2 − DPO 83 days

  Days cash is tied up between paying suppliers and collecting from customers. A negative cycle is a quiet moat: suppliers and customers fund the operation (Buffett's “float”) — the company grows on other people's money.

Is it a good business?

• Return on invested capital -12%
  Below average
  NOPAT ($641M) ÷ invested capital $5.2B (debt + equity − cash)

  The rate the business earns on the money tied up in it — Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high — pair this with Owner Earnings.

• Owner Earnings (free cash) margin 15%
  Solid
  Owner Earnings $1.7B = operating cash $4.7B − capex $3.0B

  What an owner could take out without starving the business. That's 15% of revenue. Treating stock comp as the real expense it is (less $48M of SBC) leaves $1.6B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).

• Are earnings backed by cash? $4.7B
  Loss, but cash-generative
  Net income ($1.7B) · cash from operations $4.7B

  The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash — here, they did.

How is the cash used?

• Where do the earnings go? 0%
  Reinvests most of it
  Dividends + buybacks $1M ÷ Owner Earnings $1.7B

  Of $1.7B Owner Earnings, $1M (0%) went back to shareholders — $1M dividends, $0 buybacks. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway — or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 1.11×
  Maintaining
  Capex $3.0B ÷ depreciation $2.7B

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth — or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency — or a melting asset base). The ratio won't tell you which; the filings will.

Durability — 2019–2025

A moat is high return that doesn’t fade. Here are the quality metrics across a full cycle — judge the consistency, not the latest dot.

• Return on invested capital
  history pending —
• Operating margin
  -7%
• Owner Earnings margin
  history pending —