Shaw Communications (NYSE: SJR) and CenturyLink (NYSE:CTL) are both large-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitabiliy, institutional ownership, risk, analyst recommendations and valuation.

Analyst Recommendations

This is a summary of recent ratings and target prices for Shaw Communications and CenturyLink, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shaw Communications 1 3 3 0 2.29
CenturyLink 3 5 4 0 2.08

Shaw Communications presently has a consensus target price of $27.33, suggesting a potential upside of 23.57%. CenturyLink has a consensus target price of $25.64, suggesting a potential upside of 10.41%. Given Shaw Communications’ stronger consensus rating and higher probable upside, analysts plainly believe Shaw Communications is more favorable than CenturyLink.

Profitability

This table compares Shaw Communications and CenturyLink’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shaw Communications 10.01% 9.31% 3.57%
CenturyLink 3.20% 8.96% 2.61%

Earnings and Valuation

This table compares Shaw Communications and CenturyLink’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Shaw Communications $4.11 billion 2.66 $1.64 billion $0.80 27.65
CenturyLink $17.28 billion 0.74 $6.42 billion $1.02 22.76

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

Volatility and Risk

Shaw Communications has a beta of 0.91, indicating that its stock price is 9% less volatile than the S&P 500. Comparatively, CenturyLink has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Dividends

Shaw Communications pays an annual dividend of $0.91 per share and has a dividend yield of 4.1%. CenturyLink pays an annual dividend of $2.16 per share and has a dividend yield of 9.3%. Shaw Communications pays out 113.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CenturyLink pays out 211.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

50.2% of Shaw Communications shares are owned by institutional investors. Comparatively, 77.5% of CenturyLink shares are owned by institutional investors. 1.0% of Shaw Communications shares are owned by insiders. Comparatively, 0.6% of CenturyLink shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Shaw Communications beats CenturyLink on 10 of the 16 factors compared between the two stocks.

About Shaw Communications

Shaw Communications Inc. (Shaw) is a diversified connectivity provider. The Company operates through four divisions: Consumer, Wireless, Business Network Services and Business Infrastructure Services. Under the Consumer division, the Company offers Cable telecommunications and Satellite video services to residential customers. Its Business Network Services division offers data networking, Cable telecommunications, Satellite video and fleet tracking services to businesses and public sector entities. Its Business Infrastructure Services division offers data center colocation, cloud technology and managed information technology (IT) solutions to businesses. The Company offers wireless services for voice and data communications through its Wireless division. Its wireline services offer approximately 120 high definition (HD) channels and over 10,000 on-demand, pay-per-view and subscription movie and television programming titles.

About CenturyLink

CenturyLink, Inc. is an integrated communications company. The Company is engaged in providing an array of communications services to its residential and business customers. Its segments include business, which provides strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers, and consumer, which provides strategic and legacy products and services to residential customers. Its communications services include local and long-distance voice, broadband, Multi-Protocol Label Switching (MPLS), private line (including special access), Ethernet, colocation, hosting (including cloud hosting and managed hosting), data integration, video, network, public access, Voice over Internet Protocol (VoIP), information technology and other ancillary services. As of December 31, 2016, it served approximately 5.9 million broadband subscribers and 325,000 Prism TV subscribers.

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