Head to Head Review: Centurylink (CTL) and Black Box (BBOX)

Centurylink (NYSE: CTL) and Black Box (NASDAQ:BBOX) are both telecommunications services companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Analyst Ratings

This is a summary of recent ratings for Centurylink and Black Box, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Centurylink 1 8 4 0 2.23
Black Box 0 1 0 0 2.00

Centurylink currently has a consensus target price of $22.00, suggesting a potential upside of 27.09%. Black Box has a consensus target price of $10.00, suggesting a potential upside of 166.67%. Given Black Box’s higher possible upside, analysts clearly believe Black Box is more favorable than Centurylink.

Profitability

This table compares Centurylink and Black Box’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Centurylink 1.89% 7.99% 2.16%
Black Box -2.69% -2.71% -0.86%

Risk and Volatility

Centurylink has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500. Comparatively, Black Box has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.

Dividends

Centurylink pays an annual dividend of $2.16 per share and has a dividend yield of 12.5%. Black Box pays an annual dividend of $0.24 per share and has a dividend yield of 6.4%. Centurylink pays out 372.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Black Box pays out -16.8% of its earnings in the form of a dividend.

Insider & Institutional Ownership

42.1% of Centurylink shares are held by institutional investors. Comparatively, 73.9% of Black Box shares are held by institutional investors. 0.6% of Centurylink shares are held by insiders. Comparatively, 3.7% of Black Box shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Centurylink and Black Box’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Centurylink $17.47 billion 1.06 $626.00 million $0.58 29.84
Black Box $855.70 million 0.07 -$7.05 million ($1.43) -2.62

Centurylink has higher revenue and earnings than Black Box. Black Box is trading at a lower price-to-earnings ratio than Centurylink, indicating that it is currently the more affordable of the two stocks.

Summary

Centurylink beats Black Box on 12 of the 16 factors compared between the two stocks.

About Centurylink

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.

About Black Box

Black Box Corporation is a technology solutions provider. The Company is engaged in designing, building, managing and securing the information technology (IT) infrastructure. Offerings under the Company’s Products platform include IT infrastructure, specialty networking, multimedia and keyboard/video/mouse (KVM) switching. Offerings under its Services platform include unified communications, data infrastructure and managed services. It conducts business globally and manages its business on a geographic-service type basis consisting of four segments: North America Products, North America Services, International Products and International Services. The offerings of its Products platform are distributed through value-added resellers, direct marketing manufacturers, mass merchandisers, Web retailers and others. The offerings of its Services platform are distributed through value-added resellers, manufacturers and large system integrators, among others.

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