Frontier Communications (NASDAQ:FTR) and China Telecom (NYSE:CHA) are both utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, risk and valuation.
Risk and Volatility
Frontier Communications has a beta of 0.83, indicating that its share price is 17% less volatile than the S&P 500. Comparatively, China Telecom has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500.
This table compares Frontier Communications and China Telecom’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Frontier Communications||$9.13 billion||0.04||-$1.80 billion||($3.79)||-0.94|
|China Telecom||$54.20 billion||0.81||$2.76 billion||$3.40||15.88|
China Telecom has higher revenue and earnings than Frontier Communications. Frontier Communications is trading at a lower price-to-earnings ratio than China Telecom, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent recommendations for Frontier Communications and China Telecom, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Frontier Communications currently has a consensus price target of $4.71, indicating a potential upside of 31.85%. Given Frontier Communications’ higher possible upside, equities research analysts clearly believe Frontier Communications is more favorable than China Telecom.
Frontier Communications pays an annual dividend of $0.60 per share and has a dividend yield of 16.8%. China Telecom pays an annual dividend of $1.32 per share and has a dividend yield of 2.4%. Frontier Communications pays out -15.8% of its earnings in the form of a dividend. China Telecom pays out 38.8% 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. Frontier Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional and Insider Ownership
71.6% of Frontier Communications shares are held by institutional investors. Comparatively, 0.6% of China Telecom shares are held by institutional investors. 2.3% of Frontier Communications shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This table compares Frontier Communications and China Telecom’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
China Telecom beats Frontier Communications on 10 of the 16 factors compared between the two stocks.
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.
China Telecom 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, Internet data center, and mobile virtual network 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, 2017, it had approximately 122 million access lines in service; 134 million wireline broadband subscribers; and 250 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.
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