Frontier Communications Corporation (NASDAQ: FTR) and Cincinnati Bell (NYSE:CBB) are both small-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.
Institutional and Insider Ownership
85.2% of Cincinnati Bell shares are held by institutional investors. 0.9% of Frontier Communications Corporation shares are held by company insiders. Comparatively, 1.4% of Cincinnati Bell shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Valuation and Earnings
This table compares Frontier Communications Corporation and Cincinnati Bell’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Frontier Communications Corporation||$9.59 billion||0.10||$3.74 billion||($14.42)||-0.84|
|Cincinnati Bell||$1.17 billion||0.73||$282.90 million||$1.65||12.33|
Frontier Communications Corporation has higher revenue and earnings than Cincinnati Bell. Frontier Communications Corporation is trading at a lower price-to-earnings ratio than Cincinnati Bell, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Frontier Communications Corporation has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Cincinnati Bell has a beta of 1.51, suggesting that its share price is 51% more volatile than the S&P 500.
Frontier Communications Corporation pays an annual dividend of $2.40 per share and has a dividend yield of 19.8%. Cincinnati Bell does not pay a dividend. Frontier Communications Corporation pays out -16.6% of its earnings in the form of a dividend.
This table compares Frontier Communications Corporation and Cincinnati Bell’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Frontier Communications Corporation||-9.35%||-1.28%||-0.19%|
This is a summary of current recommendations for Frontier Communications Corporation and Cincinnati Bell, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Frontier Communications Corporation||2||9||2||0||2.00|
Frontier Communications Corporation presently has a consensus price target of $8.49, indicating a potential downside of 29.83%. Cincinnati Bell has a consensus price target of $23.50, indicating a potential upside of 15.48%. Given Cincinnati Bell’s higher probable upside, analysts clearly believe Cincinnati Bell is more favorable than Frontier Communications Corporation.
Cincinnati Bell beats Frontier Communications Corporation on 8 of the 15 factors compared between the two stocks.
Frontier Communications Corporation Company Profile
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.
Cincinnati Bell Company Profile
Cincinnati Bell Inc., along with its subsidiaries, provides diversified telecommunications and technology services. The Company operates through two segments: Entertainment and Communications, and IT Services and Hardware. Through its Entertainment and Communications segment, the Company provides high-speed data, video and voice solutions to consumers and businesses over fiber network and a legacy copper network. The IT Services and Hardware segments operates through its subsidiary, Cincinnati Bell Technology Solutions Inc. (CBTS), which is engaged in the sale and service of end-to-end communications and information technology (IT) systems and solutions for business customers across the United States. The Company has interest in CyrusOne Inc., which operates carrier-neutral data center colocation business.
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