FairPoint Communications (NASDAQ: FRP) and TELUS (NYSE:TU) are both telecommunications services companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.
TELUS pays an annual dividend of $1.61 per share and has a dividend yield of 4.5%. FairPoint Communications does not pay a dividend. TELUS pays out 83.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FairPoint Communications has raised its dividend for 2 consecutive years.
FairPoint Communications has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, TELUS has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.
Insider and Institutional Ownership
88.6% of FairPoint Communications shares are held by institutional investors. Comparatively, 55.1% of TELUS shares are held by institutional investors. 7.6% of FairPoint Communications shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This is a breakdown of recent ratings and price targets for FairPoint Communications and TELUS, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
FairPoint Communications currently has a consensus price target of $17.00, indicating a potential upside of Infinity. TELUS has a consensus price target of $46.17, indicating a potential upside of 27.89%. Given FairPoint Communications’ higher possible upside, equities analysts clearly believe FairPoint Communications is more favorable than TELUS.
Earnings & Valuation
This table compares FairPoint Communications and TELUS’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|TELUS||$10.26 billion||2.09||$1.13 billion||$1.93||18.70|
TELUS has higher revenue and earnings than FairPoint Communications. FairPoint Communications is trading at a lower price-to-earnings ratio than TELUS, indicating that it is currently the more affordable of the two stocks.
This table compares FairPoint Communications and TELUS’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
TELUS beats FairPoint Communications on 9 of the 15 factors compared between the two stocks.
About FairPoint Communications
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.
TELUS Corporation (TELUS) is a telecommunications company. The Company provides a range of telecommunications services and products, including wireless and wireline voice and data. Its data services include Internet protocol (IP), television (TV), hosting, managed information technology and cloud-based services, and certain healthcare solutions. The Company operates through two business segments: Wireless segment and Wireline segment. Its wireless and wireline businesses are primarily operated through TELUS Communications Company (TCC). The Company offers business services, including healthcare, across wireless and wireline are supported through TELUS sales representatives, product specialists, independent dealers and online self-serve applications for small and medium-sized businesses (SMBs). Its business process outsourcing services are supported through sales representatives and client relationship management teams.
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