Head to Head Analysis: FairPoint Communications (FRP) & Telecom Argentina Stet – France Telecom (TEO)

FairPoint Communications (NASDAQ: FRP) and Telecom Argentina Stet – France Telecom (NYSE:TEO) are both telecommunications services companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Institutional and Insider Ownership

88.6% of FairPoint Communications shares are owned by institutional investors. Comparatively, 6.0% of Telecom Argentina Stet – France Telecom shares are owned by institutional investors. 7.6% of FairPoint Communications shares are owned by insiders. Comparatively, 1.0% of Telecom Argentina Stet – France Telecom shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares FairPoint Communications and Telecom Argentina Stet – France Telecom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FairPoint Communications -11.81% N/A -7.88%
Telecom Argentina Stet – France Telecom 11.56% 31.17% 13.70%

Volatility and Risk

FairPoint Communications has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, Telecom Argentina Stet – France Telecom has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500.

Earnings & Valuation

This table compares FairPoint Communications and Telecom Argentina Stet – France Telecom’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FairPoint Communications N/A N/A N/A $2.27 7.03
Telecom Argentina Stet – France Telecom $3.62 billion 1.87 $269.10 million $1.93 18.07

Telecom Argentina Stet – France Telecom has higher revenue and earnings than FairPoint Communications. FairPoint Communications is trading at a lower price-to-earnings ratio than Telecom Argentina Stet – France Telecom, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for FairPoint Communications and Telecom Argentina Stet – France Telecom, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FairPoint Communications 0 1 0 0 2.00
Telecom Argentina Stet – France Telecom 0 1 1 0 2.50

FairPoint Communications currently has a consensus price target of $17.00, suggesting a potential upside of 6.58%. Telecom Argentina Stet – France Telecom has a consensus price target of $29.00, suggesting a potential downside of 16.86%. Given FairPoint Communications’ higher possible upside, equities research analysts plainly believe FairPoint Communications is more favorable than Telecom Argentina Stet – France Telecom.

Summary

Telecom Argentina Stet – France Telecom beats FairPoint Communications on 7 of the 11 factors compared between the two stocks.

About FairPoint Communications

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.

About Telecom Argentina Stet – France Telecom

Telecom Argentina S.A. provides fixed-line telecommunications services in Argentina, and also provides other telephone-related services, such as international long-distance service, data transmission, information technology solutions outsourcing and Internet services. The Company’s segments include Fixed Telecommunications Services (Fixed Services), Personal Mobile Telecommunications Services (Personal Mobile Services) and Nucleo Mobile Telecommunications Services (Nucleo Mobile Services). The Company, through its subsidiaries, also provides mobile telecommunications services and international wholesale services. The Fixed services segment consists of basic telephone services, interconnection services, data transmission and Internet services, information and communication technology services, and other telephone services. The Company, through its subsidiaries, such as Telecom Personal S.A. and Nucleo S.A., provides mobile services in Argentina and Paraguay, respectively.

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