During the recent trading sessions stock of CenturyLink, Inc. (NYSE:CTL) was gathering the crowd in the stock market. Many analysts use price trends and patterns to predict future performance, and we can glean some important insights about CTL by examining the chart.
How has the stock performed recently?
CenturyLink, Inc. (NYSE:CTL) has been trading in a bearish manner, based on the relative positions of the stock’s 20 and 200 day moving averages. In the last month, the price of CTL has decreased -3.46%. Shares are now up over the past year, outperforming the broad market by -100% and underperformed a peer group of similar companies by -690%. After the latest session, which saw the stock close at a price of $16.76, CTL sits below its 52-week high.
Of course, these surface-level price movements don’t tell us much about the direction that CTL may be headed in the future. In order to predict this, technical analysts look at momentum indicators, which measure the speed and magnitude of these price movements. The idea is that as momentum slows, it may signal the approach of key support or resistance levels and a reversal of recent trends. Two such indicators are the RSI (Relative Strength Index) and the Stochastic %k Oscillator, which fluctuate on a scale of 0 to 100. A reading above 70 indicates that a stock is overvalued, and a reading below 30 implies that it is undervalued. The 20-day RSI for CTL is 47.65%, which suggests that the stock is not particularly expensive or cheap, and not predisposed to a reactive price movement based on this measure. The 20-day Stochastic %k measure, which sits at 21.75%, tells a different story, and suggests that CTL currently trades in oversold territory.
What do the trading volumes reveal?
Volume patterns can also be useful for predicting future performance. When trading activity is abnormally high, it’s often a sign that the market feels particularly strong in one way or another about the future direction of a stock. CenturyLink, Inc. (CTL) average trading volume of 11,451,680 during the past month is 8.23% below its average volume over the past year, indicating that investors have been less active than usual in the stock in recent times.
What do the analysts think?
CTL is currently undervalued by -13.39% relative to the average 1-year price target of $19.35 taken from a group of Wall Street Analysts. The average investment recommendation on a scale of 1 to 5 (1 being a strong buy, 3 a hold, and 5 a sell) is 2.60, which implies that analysts are generally neutral in their outlook for CTL over the next year.
How risky is the stock?
No study on the valuation of a stock is complete without taking into account risk. When analyzing the systematic risk associated with a stock, analysts look at beta, which measures the stock’s volatility relative to the overall market.
CenturyLink, Inc. (NYSE:CTL) has a beta of 0.82, compared to a beta of 1 for the market, which implies that the stock’s price movements are less extreme than the market as a whole. CTL therefore has an below average level of market risk. During the past couple of weeks, CTL average daily volatility was 41.94%, which is 3.08 percentage points lower than the average volatility over the past 100 days.