Level 3 Communications (NYSE: LVLT) and BT Group PLC (NYSE:BT) are both large-cap computer and technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, risk, institutional ownership, dividends, profitabiliy, analyst recommendations and earnings.

Insider and Institutional Ownership

1.0% of BT Group PLC shares are owned by institutional investors. 0.5% of Level 3 Communications shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Level 3 Communications and BT Group PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Level 3 Communications 7.80% 6.23% 2.71%
BT Group PLC 8.48% 36.64% 6.84%

Dividends

BT Group PLC pays an annual dividend of $0.90 per share and has a dividend yield of 4.4%. Level 3 Communications does not pay a dividend. BT Group PLC pays out 70.9% of its earnings in the form of a dividend. BT Group PLC has increased its dividend for 5 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for Level 3 Communications and BT Group PLC, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Level 3 Communications 1 11 2 0 2.07
BT Group PLC 3 7 8 0 2.28

Level 3 Communications currently has a consensus price target of $60.41, suggesting a potential upside of 2.98%. BT Group PLC has a consensus price target of $362.65, suggesting a potential upside of 1,692.62%. Given BT Group PLC’s stronger consensus rating and higher probable upside, analysts clearly believe BT Group PLC is more favorable than Level 3 Communications.

Volatility & Risk

Level 3 Communications has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, BT Group PLC has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Earnings & Valuation

This table compares Level 3 Communications and BT Group PLC’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Level 3 Communications $8.17 billion 2.59 $2.66 billion $1.75 33.52
BT Group PLC $31.02 billion 1.29 $8.90 billion $1.27 15.93

BT Group PLC has higher revenue and earnings than Level 3 Communications. BT Group PLC 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.

Summary

BT Group PLC beats Level 3 Communications on 11 of the 17 factors compared between the two stocks.

About Level 3 Communications

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.

About BT Group PLC

BT Group plc is a communications services company. The Company is engaged in selling fixed-voice services, broadband, mobile and television products and services, as well as managed networked information technology (IT) solutions and cyber security protection. Its segments include Consumer, which provides fixed-voice, broadband, TV and mobile services; EE, which is a mobile network operator in the United Kingdom and provides mobile and fixed communications services to consumers; Business and Public Sector, which provides communications and IT services to businesses and the public sector in the United Kingdom and the Republic of Ireland (RoI) ;Global Services, which provides managed networked IT services to corporate customers; Wholesale and Ventures, which provides fixed and mobile services to communications providers (CPs); and Openreach, which provides copper and fiber connections between its exchanges and homes and businesses.

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