China Telecommunications (NYSE: CHA) and Spirent (OTCMKTS:SPMYY) are both utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, profitability, earnings, analyst recommendations, institutional ownership, dividends and valuation.
Insider & Institutional Ownership
0.5% of China Telecommunications shares are owned by institutional investors. 1.0% of Spirent shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares China Telecommunications and Spirent’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
China Telecommunications has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Spirent has a beta of 0.21, indicating that its share price is 79% less volatile than the S&P 500.
This is a summary of current recommendations and price targets for China Telecommunications and Spirent, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
China Telecommunications pays an annual dividend of $1.21 per share and has a dividend yield of 2.6%. Spirent pays an annual dividend of $0.15 per share and has a dividend yield of 2.2%. China Telecommunications pays out 36.1% of its earnings in the form of a dividend. Spirent pays out 71.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. China Telecommunications is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares China Telecommunications and Spirent’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|China Telecommunications||$54.20 billion||0.69||$2.76 billion||$3.35||13.70|
|Spirent||$454.80 million||2.30||-$42.30 million||$0.21||32.52|
China Telecommunications has higher revenue and earnings than Spirent. China Telecommunications is trading at a lower price-to-earnings ratio than Spirent, indicating that it is currently the more affordable of the two stocks.
China Telecommunications beats Spirent on 8 of the 10 factors compared between the two stocks.
China Telecommunications Company Profile
China Telecom Corporation Limited, together with its subsidiaries, provides wireline and mobile telecommunications services primarily in the People's Republic of China. It offers wireline voice services, including local wireline telephone services and long distance wireline services; CDMA mobile voice services, such as local calls, domestic and international long distance calls, intra-provincial roaming, and inter-provincial roaming and international roaming; wireline Internet access services comprising dial-up and broadband services; wireless Internet access services; and wireline, Internet, and mobile value-added services. The company also provides Best Tone information services; and information technology-based integrated solutions, such as system integration, outsourcing, special advisory, information application, knowledge, and software development services. In addition, it offers managed data services that include digital data network, frame relay, and asynchronous transfer mode services for government agencies, large corporations, and institutions; and leased line services, as well as sells, repairs, and maintains customer-end equipment. Further, the company provides international telecommunications services, including lease of network equipment, international Internet access and transit, and Internet data center services in various countries, including the Asia Pacific, Europe, Africa, South America, and North America; and music production and related information, instant messenger, and e-commerce services, as well as sells telecommunications terminals and calling cards. As of December 31, 2016, it had approximately 127 million wireline access lines in service; 123 million wireline broadband subscribers; and 215 million mobile subscribers. The company was incorporated in 2002 and is based in Beijing, the People's Republic of China. China Telecom Corporation Limited is a subsidiary of China Telecommunications Corporation.
Spirent Company Profile
Spirent Communications plc provides test methodologies and solutions for communication technologies worldwide. The company operates through three segments: Networks & Applications, Wireless & Positioning, and Service Assurance. The Networks & Applications segment develops solutions for functional, performance, and security testing of next-generation networks and applications that simulate real-world conditions in the lab, before a commercial launch, and in the live network. This segment's solutions portfolio addresses data centers, cloud computing, network virtualization, applications and security, high speed Ethernet networks and services, and test automation and management. The Wireless & Positioning segment provides solutions to test the functionality and performance of 4G LTE and 3G mobile devices and services, satellite positioning, navigation, and timing. This segment focuses on wireless devices, wireless services, and satellite navigation and global positioning. The Service Assurance segment develops distributed systems to turn-up new services, and diagnoses and troubleshoots network and customer issues, as well as systems for mobile device management, device analytics, and intelligence solutions for mobile operators. This segment focuses on Ethernet business services, network and customer experience management analytics, and field service test tools. The company was formerly known as Spirent plc and changed its name to Spirent Communications plc in May 2006. Spirent Communications plc was founded in 1936 and is headquartered in Crawley, the United Kingdom.
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