Critical Comparison: FairPoint Communications (FRP) vs. BCE (NYSE:BCE)
FairPoint Communications (NASDAQ: FRP) and BCE (NYSE:BCE) are both telecommunications services companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitabiliy, earnings, analyst recommendations, valuation and risk.
Institutional and Insider Ownership
88.6% of FairPoint Communications shares are held by institutional investors. Comparatively, 43.9% of BCE shares are held by institutional investors. 7.6% of FairPoint Communications shares are held by insiders. Comparatively, 0.2% of BCE shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This is a breakdown of current ratings and recommmendations for FairPoint Communications and BCE, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
FairPoint Communications presently has a consensus price target of $17.00, suggesting a potential upside of 6.58%. BCE has a consensus price target of $60.00, suggesting a potential upside of 28.81%. Given BCE’s stronger consensus rating and higher probable upside, analysts clearly believe BCE is more favorable than FairPoint Communications.
Valuation and Earnings
This table compares FairPoint Communications and BCE’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|BCE||$17.27 billion||2.43||$6.49 billion||$2.48||18.78|
BCE has higher revenue and earnings than FairPoint Communications. FairPoint Communications is trading at a lower price-to-earnings ratio than BCE, indicating that it is currently the more affordable of the two stocks.
BCE pays an annual dividend of $2.13 per share and has a dividend yield of 4.6%. FairPoint Communications does not pay a dividend. BCE pays out 85.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares FairPoint Communications and BCE’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
FairPoint Communications has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, BCE has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500.
BCE beats FairPoint Communications on 9 of the 13 factors compared between the two stocks.
FairPoint Communications Company Profile
FairPoint Communications, Inc. is a provider of data, voice and communications services to business, wholesale and residential customers within its service territories. The Company offers its customers a suite of services, such as Ethernet, Session Initiation Protocol Trunking (SIP-Trunking), hosted Primary Branch Exchange (hosted PBX), managed services, data center colocation services, high capacity data transport and other Internet protocol (IP)-based services over its fiber-based network. It also offers Internet access, high-speed data, and local and long distance voice services. It provides services, such as Data and Internet Services, which include optical, Ethernet, Ethernet virtual circuit technology for cellular backhaul and private line special access services. It offers Voice Services, which include Local Calling Services, Long Distance Services and 9-1-1 Services. It also offers Network Transport Services, Interstate Access Charges and Intrastate Access Charges.
BCE Company Profile
BCE Inc. is a communications company. The Company’s segments include Bell Wireless, Bell Wireline and Bell Media. Its Bell Wireless segment provides wireless voice and data communications products and services to its residential, small and medium-sized business and large enterprise customers across Canada. Its Bell Wireline segment provides data, including Internet access and Internet protocol television (IPTV), local telephone, long distance, as well as other communications services and products to its residential, small and medium-sized business and large enterprise customers, primarily in Ontario, Quebec and the Atlantic provinces, while Satellite television (TV) service and connectivity to business customers are available nationally across Canada. Its Bell Media segment provides conventional, specialty and pay Television, digital media, and radio broadcasting services and out of home (OOH) advertising services to customers across Canada.
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