Level 3 Communications (LVLT) versus CenturyLink (NYSE:CTL) Critical Analysis
Level 3 Communications (NYSE: LVLT) and CenturyLink (NYSE:CTL) are both large-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, risk, profitabiliy and institutional ownership.
Insider and Institutional Ownership
78.0% of CenturyLink shares are owned by institutional investors. 0.5% of Level 3 Communications shares are owned by company insiders. Comparatively, 0.6% of CenturyLink shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Risk and Volatility
Level 3 Communications has a beta of 1.23, meaning that its stock price is 23% more volatile than the S&P 500. Comparatively, CenturyLink has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.
CenturyLink pays an annual dividend of $2.16 per share and has a dividend yield of 9.6%. Level 3 Communications does not pay a dividend. CenturyLink pays out 313.0% 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 is a summary of recent ratings and target prices for Level 3 Communications and CenturyLink, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Level 3 Communications||1||11||2||0||2.07|
Level 3 Communications currently has a consensus target price of $60.94, suggesting a potential upside of 6.21%. CenturyLink has a consensus target price of $25.64, suggesting a potential upside of 14.09%. Given CenturyLink’s stronger consensus rating and higher possible upside, analysts plainly believe CenturyLink is more favorable than Level 3 Communications.
Valuation & Earnings
This table compares Level 3 Communications and CenturyLink’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Level 3 Communications||$8.17 billion||2.54||$2.68 billion||$1.76||32.60|
|CenturyLink||$16.97 billion||0.72||$6.02 billion||$0.69||32.57|
CenturyLink has higher revenue and earnings than Level 3 Communications. CenturyLink 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.
This table compares Level 3 Communications and CenturyLink’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Level 3 Communications||7.85%||5.80%||2.55%|
CenturyLink beats Level 3 Communications on 9 of the 16 factors compared between the two stocks.
Level 3 Communications Company Profile
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.
CenturyLink Company Profile
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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