PLDT (NYSE:PHI) vs. FairPoint Communications (FRP) Critical Survey

FairPoint Communications (NASDAQ: FRP) and PLDT (NYSE:PHI) are both telecommunications services companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, earnings, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for FairPoint Communications and PLDT, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FairPoint Communications 0 1 0 0 2.00
PLDT 2 1 3 0 2.17

FairPoint Communications presently has a consensus price target of $17.00, indicating a potential upside of 6.58%. Given FairPoint Communications’ higher probable upside, research analysts clearly believe FairPoint Communications is more favorable than PLDT.

Risk & Volatility

FairPoint Communications has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, PLDT has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

Dividends

PLDT pays an annual dividend of $1.50 per share and has a dividend yield of 4.5%. FairPoint Communications does not pay a dividend. PLDT pays out 66.1% of its earnings in the form of a dividend.

Profitability

This table compares FairPoint Communications and PLDT’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%
PLDT 14.98% 24.71% 5.90%

Insider & Institutional Ownership

88.6% of FairPoint Communications shares are owned by institutional investors. Comparatively, 9.5% of PLDT shares are owned by institutional investors. 7.6% of FairPoint Communications shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares FairPoint Communications and PLDT’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FairPoint Communications N/A N/A N/A $2.27 7.03
PLDT $3.09 billion 2.31 $1.25 billion $2.27 14.55

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

Summary

PLDT beats FairPoint Communications on 8 of the 12 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 PLDT

PLDT, Inc., formerly Philippine Long Distance Telephone Company (PLDT), is a telecommunications service provider in the Philippines. The Company operates through three business segments: Wireless, Fixed Line and Others. The Company, through its business segments, offers a range of telecommunications services across the Philippines’ fiber optic backbone and wireless and fixed line networks. The Company’s wireless segment provides cellular, wireless broadband and other services, and digital platforms and mobile financial services. Its Fixed Line segment provides local exchange, international long distance, national long distance, data and other network and miscellaneous services under its fixed line business. It offers postpaid and prepaid fixed line services. Its Other business consists of PLDT Communications and Energy Ventures, Inc. (PCEV), an investment holding company. It also focuses on providing wireless voice communications and wireless data communications.

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