Frontier Communications Corporation (NASDAQ: FTR) and Neustar (NYSE:NSR) are both small-cap telecommunications services companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.

Earnings & Valuation

This table compares Frontier Communications Corporation and Neustar’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Frontier Communications Corporation $8.90 billion 0.06 -$373.00 million ($13.75) -0.53
Neustar N/A N/A N/A $3.27 10.24

Neustar has higher revenue, but lower earnings than Frontier Communications Corporation. Frontier Communications Corporation is trading at a lower price-to-earnings ratio than Neustar, indicating that it is currently the more affordable of the two stocks.

Dividends

Frontier Communications Corporation pays an annual dividend of $2.40 per share and has a dividend yield of 33.2%. Neustar does not pay a dividend. Frontier Communications Corporation pays out -17.5% of its earnings in the form of a dividend.

Insider and Institutional Ownership

88.8% of Neustar shares are held by institutional investors. 0.9% of Frontier Communications Corporation shares are held by company insiders. Comparatively, 2.9% of Neustar shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Frontier Communications Corporation and Neustar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Frontier Communications Corporation -9.17% -1.97% -0.28%
Neustar 15.50% 19.28% 8.80%

Analyst Ratings

This is a breakdown of current ratings for Frontier Communications Corporation and Neustar, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Frontier Communications Corporation 4 8 1 0 1.77
Neustar 0 2 0 0 2.00

Frontier Communications Corporation currently has a consensus price target of $9.54, suggesting a potential upside of 31.90%. Neustar has a consensus price target of $29.00, suggesting a potential downside of 13.43%. Given Frontier Communications Corporation’s higher probable upside, equities research analysts clearly believe Frontier Communications Corporation is more favorable than Neustar.

Summary

Neustar beats Frontier Communications Corporation on 7 of the 12 factors compared between the two stocks.

About Frontier Communications Corporation

Frontier Communications Corporation (Frontier) is a provider of communications services in the United States. The Company offers a portfolio of communications services for residential and business customers. Its products and services include data and Internet services, video services, voice services, access services and customer premise equipment (CPE). The Company offers a range of broadband services. The principal residential service it provides is broadband Internet service. Its commercial services include Ethernet, Dedicated Internet, Multiprotocol Label Switching (MPLS), Time Division Multiplexing (TDM) data transport services and optical transport services. It also offers wireless broadband services (using unlicensed spectrum) in various markets utilizing networks that it owns or operates. In addition, the Company offers its Frontier Secure suite of products, including computer security, cloud backup and sharing, identity protection and equipment insurance.

About Neustar

NeuStar, Inc. is a global information services provider. The Company’s cloud-based platforms and differentiated data sets offer informative, real-time analytics, which enable clients to make actionable, data-driven decisions. It provides chief marketing officers a suite of services to plan their media spends, identify and locate desired customers, invest in marketing campaigns, deliver relevant offers and measure the performance of these activities. Security professionals use the Company’s solutions to maximize Web performance and protect against malicious attacks. It enables the exchange of essential operating information across multiple carriers to provision and manage services, assisting clients with order processing and routing of customer inquiries. The Company’s services include marketing services, security services, data services and number portability administration center (NPAC) services.

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