Critical Contrast: FairPoint Communications (FRP) & 8X8 (EGHT)

FairPoint Communications (NASDAQ: FRP) and 8X8 (NASDAQ:EGHT) are both small-cap telecommunications services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, valuation, analyst recommendations and dividends.

Valuation & Earnings

This table compares FairPoint Communications and 8X8’s top-line revenue, earnings per share (EPS) 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 N/A
8X8 $253.39 million 6.37 -$4.75 million ($1.02) -17.21

FairPoint Communications has higher earnings, but lower revenue than 8X8. 8X8 is trading at a lower price-to-earnings ratio than FairPoint Communications, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

88.6% of FairPoint Communications shares are held by institutional investors. Comparatively, 71.6% of 8X8 shares are held by institutional investors. 7.6% of FairPoint Communications shares are held by insiders. Comparatively, 4.4% of 8X8 shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares FairPoint Communications and 8X8’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%
8X8 -2.56% 0.03% 0.03%

Risk and Volatility

FairPoint Communications has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, 8X8 has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for FairPoint Communications and 8X8, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FairPoint Communications 0 1 0 0 2.00
8X8 0 4 7 0 2.64

FairPoint Communications currently has a consensus price target of $17.00, indicating a potential upside of Infinity. 8X8 has a consensus price target of $18.89, indicating a potential upside of 7.63%. Given FairPoint Communications’ higher possible upside, analysts plainly believe FairPoint Communications is more favorable than 8X8.

Summary

8X8 beats FairPoint Communications on 7 of the 12 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.

8X8 Company Profile

8×8, Inc. provides cloud-based, enterprise-class software solutions. The Company’s solutions are delivered through Software as a Service (SaaS) business model. Its segments include Americas and Europe. Its software platform brings together cloud, mobile, collaboration, video and data science technologies. Through a combination of open application program interface (API) and pre-built integrations, its solutions leverage critical customer context from internal data systems and customer relationship management (CRM) systems. Its software product, branded as 8×8 Virtual Office, delivers voice as a service across the world. 8×8 Virtual Office enables a customer to use a single business phone number to place and receive calls from any supported device. It provides software to enable a multi-channel contact center under the 8×8 Virtual Contact Center brand. Its Virtual Office Meetings software solution is a tool for teams within the enterprise to meet and collaborate on a shared project.

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