Critical Review: Telecom Argentina Stet – France Telecom (TEO) & Frontier Communications Corporation (NASDAQ:FTR)

Frontier Communications Corporation (NASDAQ: FTR) and Telecom Argentina Stet – France Telecom (NYSE:TEO) are both utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, profitability, dividends and institutional ownership.

Institutional and Insider Ownership

5.2% of Telecom Argentina Stet – France Telecom shares are held by institutional investors. 0.9% of Frontier Communications Corporation shares are held by company insiders. Comparatively, 1.0% of Telecom Argentina Stet – France Telecom shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Frontier Communications Corporation has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500. Comparatively, Telecom Argentina Stet – France Telecom has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Frontier Communications Corporation and Telecom Argentina Stet – France Telecom, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Frontier Communications Corporation 2 9 2 0 2.00
Telecom Argentina Stet – France Telecom 0 2 2 0 2.50

Frontier Communications Corporation currently has a consensus price target of $7.33, suggesting a potential downside of 44.11%. Telecom Argentina Stet – France Telecom has a consensus price target of $29.00, suggesting a potential downside of 6.24%. Given Telecom Argentina Stet – France Telecom’s stronger consensus rating and higher possible upside, analysts clearly believe Telecom Argentina Stet – France Telecom is more favorable than Frontier Communications Corporation.

Profitability

This table compares Frontier Communications Corporation and Telecom Argentina Stet – France Telecom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Frontier Communications Corporation -9.35% -1.28% -0.19%
Telecom Argentina Stet – France Telecom 9.99% 27.60% 12.02%

Dividends

Frontier Communications Corporation pays an annual dividend of $2.40 per share and has a dividend yield of 18.3%. Telecom Argentina Stet – France Telecom does not pay a dividend. Frontier Communications Corporation pays out -16.6% of its earnings in the form of a dividend.

Valuation and Earnings

This table compares Frontier Communications Corporation and Telecom Argentina Stet – France Telecom’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Frontier Communications Corporation $9.59 billion 0.11 $3.74 billion ($14.42) -0.91
Telecom Argentina Stet – France Telecom $3.37 billion 1.78 $911.82 million $1.93 16.03

Frontier Communications Corporation has higher revenue and earnings than Telecom Argentina Stet – France Telecom. Frontier Communications Corporation is trading at a lower price-to-earnings ratio than Telecom Argentina Stet – France Telecom, indicating that it is currently the more affordable of the two stocks.

Summary

Telecom Argentina Stet – France Telecom beats Frontier Communications Corporation on 10 of the 14 factors compared between the two stocks.

Frontier Communications Corporation Company Profile

Frontier Communications Corporation (Frontier) is a provider of communications services in the United States. The Company offers a portfolio of communications services for residential and business customers. Its products and services include data and Internet services, video services, voice services, access services and customer premise equipment (CPE). The Company offers a range of broadband services. The principal residential service it provides is broadband Internet service. Its commercial services include Ethernet, Dedicated Internet, Multiprotocol Label Switching (MPLS), Time Division Multiplexing (TDM) data transport services and optical transport services. It also offers wireless broadband services (using unlicensed spectrum) in various markets utilizing networks that it owns or operates. In addition, the Company offers its Frontier Secure suite of products, including computer security, cloud backup and sharing, identity protection and equipment insurance.

Telecom Argentina Stet – France Telecom Company Profile

Telecom Argentina S.A. provides fixed-line telecommunications services in Argentina, and also provides other telephone-related services, such as international long-distance service, data transmission, information technology solutions outsourcing and Internet services. The Company’s segments include Fixed Telecommunications Services (Fixed Services), Personal Mobile Telecommunications Services (Personal Mobile Services) and Nucleo Mobile Telecommunications Services (Nucleo Mobile Services). The Company, through its subsidiaries, also provides mobile telecommunications services and international wholesale services. The Fixed services segment consists of basic telephone services, interconnection services, data transmission and Internet services, information and communication technology services, and other telephone services. The Company, through its subsidiaries, such as Telecom Personal S.A. and Nucleo S.A., provides mobile services in Argentina and Paraguay, respectively.

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