Q1 earnings reset expectations, but losses continue

Lumen Technologies (LUMN) reported first quarter 2026 sales of US$2,899 million, compared with US$3,182 million a year earlier. Net loss was US$200 million versus US$201 million, keeping loss per share steady at US$0.20.

The share price has been volatile around these Q1 results, with a 1 month share price return of 32.05% and a 90 day share price return of 39.22%. The 1 year total shareholder return of 116.67% contrasts with a 5 year total shareholder loss of 25.89%, suggesting that recent momentum has picked up from a weaker long run.

If Lumen's recent swing has your attention, this can be a useful moment to see what else is moving and check out 36 power grid technology and infrastructure stocks

With revenue still soft, ongoing losses and a share price that has already moved sharply, the key question now is simple: is Lumen stock still undervalued, or is the recent rally already pricing in future growth?

Most Popular Narrative: 20.3% Overvalued

The most followed narrative puts Lumen's fair value at $7.68, compared with a last close of $9.23, so the story currently assumes a rich starting point.

Strategic refinancing, deleveraging, and the pending sale of the consumer fiber-to-the-home business to AT&T will materially strengthen Lumen's balance sheet, reduce interest expense by $300 to $400 million annually, and free up capital for enterprise-focused growth initiatives, directly impacting future net earnings and free cash flow.

Want to see what kind of revenue path and margin reset would need to sit behind that fair value, and how far analysts stretch profit expectations to get there? The full narrative lays out the earnings bridge, the future P/E assumption and the discount rate that hold this $7.68 figure together.

Result: Fair Value of $7.68 (OVERVALUED)

However, there is still the risk that double digit declines in legacy products and a heavy debt load could offset progress in enterprise and AI focused contracts.

Another View: Price To Sales Sends A Mixed Signal

While the analyst narrative and our DCF style thinking see Lumen as richly priced versus a $7.68 fair value, the simple P/S check tells a different story. At 0.8x sales, Lumen trades well below the US Telecom industry at 1.4x and far under peers at 11.6x, yet slightly above its own fair ratio of 0.7x.

That mix of apparent discount to the sector and premium to the fair ratio points to real valuation tension. Which side of that gap do you think eventually wins out for this stock: the sector comparison, or the pull toward its own fair ratio?

Next Steps

If this all feels finely balanced between opportunity and risk, use that tension as a prompt to review the numbers yourself and move quickly to shape an independent view, starting with the 3 important warning signs

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.