Lumen Technologies (NYSE:LUMN) stock has fallen over 28% in the past nine months. The telecom company’s most recent plunge comes after reporting its underwhelming fourth-quarter results.

Moreover, investors fear a potential dividend cut, despite its management’s relentless commitment. Consequently, LUMN stock now trades at a throw-away valuation.

LUMN stock hasn’t performed too well at the stock market over the past few years. It is due to its sluggish operating performance with virtually every metric in the red.

However, the company is currently in the initial stages of a multi-year turnaround, likely to reverse its fortunes. It’s ramping up investments in the more profitable business areas and selling its less attractive assets. Moreover, its dividends are well-covered by its cash flows and reaffirmed.

So, Lumen appears to be attractive for the long haul.

A Look At Lumen’s Q4 Results

Lumen’s recent results led to a massive sell-off in its stock price. However, if we look at the numbers, it performed decently. It posted revenues of $4.85 billion for the quarter, just shy of the $4.86 billion consensus.

Moreover, including special items, its adjusted EBITDA came in at $2.09 billion, a 2.1% improvement from the prior-year period. Its EBITDA for the whole year was at $8.44 billion, which is within its guidance of $8.4 billion to $8.6 billion. Additionally, its adjusted earnings per share shot up 21% on a year-over-year basis to 51 cents, which is just below analyst estimates of 53 cents.

Lumen has done well to manage its operating expenses, including sales and stock-based compensation. Moreover, capital expenditures were up considerably during the fourth quarter as it began ramping up investments in its quantum fiber business.

Overall, its capital expenditures dropped from the previous year, which is commendable. Free cash flows were incredible for the quarter and the year, generating a whopping $776 million. Additionally, the FCF supported a sizeable net reduction of $1.5 billion.

Plenty Of Positives

Lumen Technologies is in the process of streamlining its operations to focus more on high-growth opportunities. Naturally, these efforts will weigh in on its near-term EBITDA and free cash flows. It forecasts a 22% and 55% year drop this year for its EBITDA and free cash flows.

However, the company will continue to pay out $1 per share in dividends. That takes its dividend yield close to 10% with a payout ratio of over 50%. On top of that, its balance sheet position remains solid with a well-laddered debt maturity schedule. Moreover, asset dispositions will significantly bolster its cash balance this year.

The company management is convinced it can return to growth soon. It believes in the massive growth opportunity in the Quantum Fiber business along with strong pipeline momentum during the fourth quarter. It expects to expand its fiber footprint to 12 million addresses or more in the coming years from 2.6 million today. Fiber upgrades will be the key to driving growth in its broadband business and acquiring customers at higher rates.

Once its assets are sold, it can improve its revenue mix as it expects to abandon most of its unprofitable legacy businesses. The goal is to select profitable capital investments and maximize competitiveness.

Bottom Line on LUMN Stock

LUMN stock has had a forgettable year at the market. However, considering its positive outlook ahead and relatively impressive fourth-quarter results, the price drop is undeserved. It is wisely investing in its more lucrative businesses and sell-off the ones which have been unprofitable for a long time.

However, investors need to be patient with the stock and allow the bull thesis to play out to reap the rewards.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines