Centurylink (CTL) vs. FairPoint Communications (FRP) Financial Review

Centurylink (NYSE: CTL) and FairPoint Communications (NASDAQ:FRP) are both computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, profitability, analyst recommendations and valuation.

Analyst Ratings

This is a summary of recent ratings for Centurylink and FairPoint Communications, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Centurylink 1 7 5 0 2.31
FairPoint Communications 0 1 0 0 2.00

Centurylink presently has a consensus price target of $21.67, indicating a potential upside of 14.46%. FairPoint Communications has a consensus price target of $17.00, indicating a potential upside of Infinity. Given FairPoint Communications’ higher possible upside, analysts clearly believe FairPoint Communications is more favorable than Centurylink.

Institutional & Insider Ownership

59.4% of Centurylink shares are held by institutional investors. Comparatively, 88.6% of FairPoint Communications shares are held by institutional investors. 0.6% of Centurylink shares are held by insiders. Comparatively, 7.6% of FairPoint Communications shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Centurylink and FairPoint Communications’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Centurylink $17.66 billion 1.15 $1.39 billion $1.76 10.76
FairPoint Communications N/A N/A N/A $2.27 N/A

Centurylink has higher revenue and earnings than FairPoint Communications. FairPoint Communications is trading at a lower price-to-earnings ratio than Centurylink, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Centurylink has a beta of 0.82, suggesting that its stock price is 18% less volatile than the S&P 500. Comparatively, FairPoint Communications has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Dividends

Centurylink pays an annual dividend of $2.16 per share and has a dividend yield of 11.4%. FairPoint Communications does not pay a dividend. Centurylink pays out 122.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Centurylink and FairPoint Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Centurylink 7.87% 5.88% 1.65%
FairPoint Communications -11.81% N/A -7.88%

Summary

Centurylink beats FairPoint Communications on 9 of the 14 factors compared between the two stocks.

Centurylink Company Profile

CenturyLink, Inc. is an integrated communications company. The Company is engaged in providing an array of communications services to its residential and business customers. Its segments include Enterprise, which provides strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers, and Consumer, which provides strategic and legacy products and services to residential customers. Its communications services include local and long-distance voice, broadband, Multi-Protocol Label Switching (MPLS), private line (including special access), Ethernet, colocation, hosting (including cloud hosting and managed hosting), data integration, video, network, public access, Voice over Internet Protocol (VoIP), information technology and other ancillary services.

FairPoint Communications Company Profile

FairPoint Communications, Inc. is a provider of data, voice and communications services to business, wholesale and residential customers within its service territories. The Company offers its customers a suite of services, such as Ethernet, Session Initiation Protocol Trunking (SIP-Trunking), hosted Primary Branch Exchange (hosted PBX), managed services, data center colocation services, high capacity data transport and other Internet protocol (IP)-based services over its fiber-based network. It also offers Internet access, high-speed data, and local and long distance voice services. It provides services, such as Data and Internet Services, which include optical, Ethernet, Ethernet virtual circuit technology for cellular backhaul and private line special access services. It offers Voice Services, which include Local Calling Services, Long Distance Services and 9-1-1 Services. It also offers Network Transport Services, Interstate Access Charges and Intrastate Access Charges.

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