FairPoint Communications (NASDAQ: FRP) and Level 3 Communications (NYSE:LVLT) are both telecommunications services companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, risk, profitability and valuation.
Earnings and Valuation
This table compares FairPoint Communications and Level 3 Communications’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Level 3 Communications||N/A||N/A||N/A||$1.77||30.30|
FairPoint Communications is trading at a lower price-to-earnings ratio than Level 3 Communications, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
FairPoint Communications has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500. Comparatively, Level 3 Communications has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for FairPoint Communications and Level 3 Communications, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Level 3 Communications||1||3||0||0||1.75|
FairPoint Communications currently has a consensus target price of $17.00, indicating a potential upside of 6.58%. Level 3 Communications has a consensus target price of $60.16, indicating a potential upside of 12.18%. Given Level 3 Communications’ higher probable upside, analysts plainly believe Level 3 Communications is more favorable than FairPoint Communications.
Insider & Institutional Ownership
88.6% of FairPoint Communications shares are owned by institutional investors. Comparatively, 98.8% of Level 3 Communications shares are owned by institutional investors. 7.6% of FairPoint Communications shares are owned by company insiders. Comparatively, 0.5% of Level 3 Communications shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This table compares FairPoint Communications and Level 3 Communications’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Level 3 Communications||7.47%||5.52%||2.45%|
Level 3 Communications beats FairPoint Communications on 7 of the 10 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.
About Level 3 Communications
Level 3 Communications, Inc. is a provider of a range of integrated communications services. The Company’s operating segments include North America, EMEA and Latin America. The North America includes operations in Atlanta, Georgia; Littleton, Colorado; Miami, Florida; Montreal, Canada; New York, New York; Phoenix, Arizona; Pittsburgh, Pennsylvania; Southfield, Michigan, and Tulsa, Oklahoma. The Europe segment includes operations in Basingstoke, England; Crewe, England; Dublin, Ireland; London, England; Amsterdam, The Netherlands, and Paris, France. The Latin America includes operations in Colombia; Buenos Aires, Argentina; Caracas, Venezuela; Lima, Peru; Quito, Ecuador; Santiago, Chile, and Sao Paulo, Brazil. It offers optical, Internet Protocol, computing and storage technologies. It offers a range of communications services, including Internet Protocol (IP) and data services, transport and fiber services, colocation and data center services, security services and voice services.
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