Analyzing Level 3 Communications (LVLT) & Telecom Argentina (TEO)

Level 3 Communications (NYSE: LVLT) and Telecom Argentina (NYSE:TEO) are both mid-cap telecommunications services companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, risk, valuation, profitability and institutional ownership.

Insider & Institutional Ownership

98.8% of Level 3 Communications shares are owned by institutional investors. Comparatively, 6.0% of Telecom Argentina shares are owned by institutional investors. 0.5% of Level 3 Communications shares are owned by insiders. Comparatively, 1.0% of Telecom Argentina shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Level 3 Communications and Telecom Argentina’s 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%
Telecom Argentina 11.60% 31.15% 13.69%

Volatility and Risk

Level 3 Communications has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Telecom Argentina has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500.

Valuation & Earnings

This table compares Level 3 Communications and Telecom Argentina’s top-line revenue, earnings per share (EPS) 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
Telecom Argentina $3.62 billion 2.07 $269.10 million $2.04 18.94

Telecom Argentina has higher revenue and earnings than Level 3 Communications. Telecom Argentina 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.

Analyst Recommendations

This is a summary of current recommendations for Level 3 Communications and Telecom Argentina, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Level 3 Communications 1 3 0 0 1.75
Telecom Argentina 0 1 1 0 2.50

Level 3 Communications presently has a consensus price target of $60.16, suggesting a potential upside of 12.18%. Telecom Argentina has a consensus price target of $29.00, suggesting a potential downside of 24.95%. Given Level 3 Communications’ higher possible upside, analysts clearly believe Level 3 Communications is more favorable than Telecom Argentina.

Summary

Telecom Argentina beats Level 3 Communications on 9 of the 12 factors compared between the two stocks.

Level 3 Communications Company Profile

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.

Telecom Argentina 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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