Consolidated Communications (NASDAQ: CNSL) and Frontier Communications (NASDAQ:FTR) are both small-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, institutional ownership and earnings.
Valuation and Earnings
This table compares Consolidated Communications and Frontier Communications’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Consolidated Communications||$1.06 billion||0.83||$64.94 million||$0.26||47.54|
|Frontier Communications||$9.13 billion||0.05||-$1.80 billion||($3.79)||-1.41|
Consolidated Communications has higher earnings, but lower revenue than Frontier Communications. Frontier Communications is trading at a lower price-to-earnings ratio than Consolidated Communications, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
72.9% of Consolidated Communications shares are owned by institutional investors. Comparatively, 65.6% of Frontier Communications shares are owned by institutional investors. 2.4% of Consolidated Communications shares are owned by insiders. Comparatively, 2.3% of Frontier Communications shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
This is a breakdown of current recommendations and price targets for Consolidated Communications and Frontier Communications, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Consolidated Communications presently has a consensus target price of $14.67, indicating a potential upside of 18.66%. Frontier Communications has a consensus target price of $10.29, indicating a potential upside of 92.01%. Given Frontier Communications’ higher possible upside, analysts plainly believe Frontier Communications is more favorable than Consolidated Communications.
Consolidated Communications pays an annual dividend of $1.55 per share and has a dividend yield of 12.5%. Frontier Communications pays an annual dividend of $1.20 per share and has a dividend yield of 22.4%. Consolidated Communications pays out 596.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Frontier Communications pays out -31.7% of its earnings in the form of a dividend. Frontier Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Consolidated Communications and Frontier Communications’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
Consolidated Communications has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, Frontier Communications has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.
Consolidated Communications beats Frontier Communications on 12 of the 16 factors compared between the two stocks.
Consolidated Communications Company Profile
Consolidated Communications Holdings, Inc., through its subsidiaries, provides various integrated communications services to business and residential customers in the United States. It offers a range of communication services and products that include local and long-distance, high-speed broadband Internet access, video, voice over Internet protocol, private line, custom calling features, security, cloud, data center, managed and IT, and directory publishing services, as well as engages in equipment sales activities. The company also sells and supports telecommunications equipment, such as key, private branch exchange, IP-based telephone systems, and other hardware solutions, as well as offers support services to medium and large business customers. As of December 31, 2017, it had approximately 972 thousand voice connections, 784 thousand data connections, and 103 thousand video connections. The company serves customers in consumer, commercial, and carrier channels. Consolidated Communications Holdings, Inc. was founded in 1894 and is headquartered in Mattoon, Illinois.
Frontier Communications Company Profile
Frontier Communications Corporation provides communications services to consumer, commercial, and wholesale customers in the United States. It offers broadband, video, voice, and other services and products through a combination of fiber and copper based networks to consumer customers. The company also provides broadband, Ethernet, traditional circuit-based, and voice services; and software defined wide area network, multiprotocol label switching, and time division multiplexing data transport and optical transport services to small, medium, and large enterprises, as well as advanced hardware and network solutions and services, and customer premise equipment. In addition, it offers 24/7 technical support; wireless broadband services in selected markets; satellite TV video services; voice services, including data-based VoIP, and long distance and voice messaging services; and a package of communications services. Further, the company provides a range of access services that allow other carriers to use facilities to originate and terminate their local and long distance voice traffic. As of December 31, 2017, it served approximately 4.9 million customers and 3.9 million broadband subscribers in 29 states. The company was formerly known as Citizens Communications Company and changed its name to Frontier Communications Corporation in July 2008. Frontier Communications Corporation was founded in 1927 and is based in Norwalk, Connecticut.
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