Level 3 Communications Inc. can't hide the fact that it's burdened with debt.
The company had total debt obligations of $8.5 billion as of March 31, according to a Securities and Exchange Commission filing.
With the stock down about 40 percent over the past 12 months and Level 3 incurring hundreds of millions of dollars in negative free cash flow, analyst Rex Moore of The Motley Fool is one investor who is bearish on Level 3's prospects.
Level 3 barely makes enough to cover its interest payments, said Moore in a video presentation that featured data from S&P Capital IQ on Level 3's cash ($748 million), net debt ($7.761 billion), debt-to-capital ratio (87 percent) and debt-to-equity ratio (650 percent).
Moore acknowledged a level of optimism in the marketplace over Level 3's 2011 acquisition of Global Crossing.
Still, he characterized Level 3's losses as "appalling" and said the company needs to show that it can generate cash flow on a regular basis before he'll consider the stock (LVLT: NYSE).
Level 3 incurred a first-quarter net loss of $139 million, although it was a modest improvement from a $205 million loss in the same period the prior year. Level 3 reported negative free cash flow of $213 million, citing "typical seasonal working capital uses during the quarter." Level 3 defines free cash flow (FCF) as "net cash provided by (used in) operating activities less capital expenditures."
In a first-quarter investor presentation, the company said it anticipates generating negative FCF for the year. However, in the aggregate for the reminder of the year, Level 3 expects FCF to be positive.
Perhaps, when Level 3 reports its second-quarter results on July 25, Moore will form a more favorable impression of the global communications company.