FairPoint Communications (FRP) vs. BT Group PLC (BT) Critical Review
FairPoint Communications (NASDAQ: FRP) and BT Group PLC (NYSE:BT) are both telecommunications services companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.
Volatility and Risk
FairPoint Communications has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, BT Group PLC has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.
Valuation & Earnings
This table compares FairPoint Communications and BT Group PLC’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|BT Group PLC||$31.83 billion||1.22||$9.05 billion||$1.04||18.78|
BT Group PLC has higher revenue and earnings than FairPoint Communications. FairPoint Communications is trading at a lower price-to-earnings ratio than BT Group PLC, indicating that it is currently the more affordable of the two stocks.
BT Group PLC pays an annual dividend of $0.95 per share and has a dividend yield of 4.9%. FairPoint Communications does not pay a dividend. BT Group PLC pays out 91.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FairPoint Communications has raised its dividend for 5 consecutive years.
This is a summary of current ratings and recommmendations for FairPoint Communications and BT Group PLC, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|BT Group PLC||3||7||8||0||2.28|
FairPoint Communications presently has a consensus price target of $17.00, indicating a potential upside of 6.58%. BT Group PLC has a consensus price target of $358.82, indicating a potential upside of 1,737.29%. Given BT Group PLC’s stronger consensus rating and higher possible upside, analysts clearly believe BT Group PLC is more favorable than FairPoint Communications.
This table compares FairPoint Communications and BT Group PLC’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|BT Group PLC||7.14%||39.24%||6.77%|
Insider & Institutional Ownership
88.6% of FairPoint Communications shares are held by institutional investors. Comparatively, 1.0% of BT Group PLC shares are held by institutional investors. 7.6% of FairPoint Communications shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
BT Group PLC beats FairPoint Communications on 9 of the 14 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.
BT Group PLC Company Profile
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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