CenturyLink (CTL) and Juniper Networks (JNPR) are two companies that are on track to profit from data growth. While CenturyLink is a telecom company focused on providing high-speed broadband to customers, Juniper is a network equipment manufacturer that supplies infrastructure to benefit from growing data consumption. Let's see how the two of them are profiting from data growth.
CenturyLink is in tune with its peers in the hybrid cloud market as it offers a full range of network cloud, managed hosting, collocation and IT services that are at the moment rising enormously. For example, the company has deployed limited gigabit service in Omaha that provides a full range of network cloud and managed hosting, collocation, and IT services. CenturyLink's results exceeded expectations on the back of growth in small and medium businesses that will certainly increase its chances of increasing market share in the coming quarters.
CenturyLink is also expected to continue investing in its high speed Internet and Prism TV capabilities with plans to push fiber deeper into its network, and add approximately 300,000 Prism TV addressable homes in 2014. This clearly shows the intensity and aggressiveness of the company.
CenturyLink exited the first quarter of 2014 with $219 million in cash and cash equivalents as compared to $168 million at the end of fiscal 2013. Its long-term debt decreased as well. Also, CenturyLink generated strong operating cash flow of $1,788 million in the quarter, while its free cash flow was $860 million.
As a result, it expects its dividend payout ratio to be around 45% for the full year. Also, the company is looking forward to complete its $2 billion stock repurchase program in the second quarter of 2014. It also expects earnings of $0.66 per share for the quarter, which is well above the $0.61 guidance.
CenturyLink currently trades at a forward P/E of 14.38 and has a high operating margin of 15.16%. Also, analysts have forecasted earnings growth of 60.40% for this year. The company's solid outlook certainly makes the stock a very attractive investment for the short as well as the long term.
A closer look at Juniper
Juniper introduced a new capital allocation program in February which preserves flexibility for future growth and returns capital to its stockholders through buybacks and dividends. Hence, its strategy is truly focused on meeting its customer’s most pressing needs with innovation.
Juniper made serious efforts to ensure that R&D and go-to-market functions are focused on cross-functional execution attainment of JDI strategy and business plan.
The One-Juniper approach focuses the company’s R&D resources on areas of innovation that matter most to its customers and partners high IQ networks and cloud. Therefore, these changes will provide an opportunity to truly focus on resources and target the value creating technologies.
Juniper shipped the industry’s highest density packet optical solutions with new Gig-E DWDM line cards for the PTX in the first quarter. Juniper is assisting some of the largest cloud infrastructure providers in the world and is focused on the high-growth data center switching segment, including web services, financial services, and infrastructure-as-a service provider with differentiated solutions, focused execution, and high responsiveness to customers.
There’s strong progress in the security business of Juniper and it is witnessing continued strength in its high-end SRX business with double-digit year-over-year growth as there’s a need for performance and scale in data center consolidation and clouds.
The company is focused on continued innovation and is executing on its Integrated Operating Plan. According to a study by job search site Glassdoor, Juniper spends about 22% of revenue on research and development, compared with 12% at Cisco.
Both companies are making solid moves in their businesses and are on track to benefit from growth in data. So, investors should definitely take a closer look at these two companies as they can deliver solid long-term growth.