Analyzing Frontier Communications (FTR) and OI (OIBR)

Frontier Communications (NASDAQ: FTR) and OI (NYSE:OIBR) are both small-cap telecommunications services companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, earnings, dividends, risk, analyst recommendations, valuation and institutional ownership.

Valuation & Earnings

This table compares Frontier Communications and OI’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Frontier Communications $8.90 billion 0.06 -$373.00 million ($13.75) -0.49
OI N/A N/A N/A ($3.26) -2.09

OI has lower revenue, but higher earnings than Frontier Communications. OI is trading at a lower price-to-earnings ratio than Frontier Communications, indicating that it is currently the more affordable of the two stocks.

Dividends

Frontier Communications pays an annual dividend of $2.40 per share and has a dividend yield of 35.7%. OI does not pay a dividend. Frontier Communications pays out -17.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Frontier Communications and OI, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Frontier Communications 5 8 1 0 1.71
OI 0 0 0 0 N/A

Frontier Communications currently has a consensus price target of $9.33, suggesting a potential upside of 38.88%. Given Frontier Communications’ higher probable upside, equities analysts plainly believe Frontier Communications is more favorable than OI.

Volatility & Risk

Frontier Communications has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, OI has a beta of 1.91, indicating that its share price is 91% more volatile than the S&P 500.

Insider & Institutional Ownership

62.9% of Frontier Communications shares are owned by institutional investors. 0.9% of Frontier Communications shares are owned by 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.

Profitability

This table compares Frontier Communications and OI’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Frontier Communications -9.17% -1.97% -0.28%
OI -24.34% -49.64% -7.06%

Summary

Frontier Communications beats OI on 11 of the 13 factors compared between the two stocks.

Frontier Communications 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.

OI Company Profile

Oi S.A. is an integrated telecommunications service provider in Brazil. The Company is a switched fixed-line telephony services (STFC) concessionaire. It is engaged in the provision of STFC as a local and intraregional long-distance carrier. Its segments include Residential Services, Personal Mobility, and SMEs/Corporate. It offers a range of integrated telecommunications services that include fixed and mobile, broadband, pay television (TV), data transmission and Internet provider services. The Company’s Residential Services segment is focused on the sale of fixed telephony services, including voice services, data communication services (broadband), and pay TV. The Personal Mobility segment is focused on the sale of mobile telephony services to subscription and prepaid customers, and mobile broadband customer. The SMEs/Corporate segment includes corporate solutions offered to its small, medium-sized, and large corporate customers.

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