CenturyLink (CTL) versus Level 3 Communications (LVLT) Head-To-Head Analysis

CenturyLink (NYSE: CTL) and Level 3 Communications (NYSE:LVLT) are both large-cap computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, analyst recommendations, valuation, institutional ownership, profitabiliy and earnings.

Risk & Volatility

CenturyLink has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Level 3 Communications has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

Profitability

This table compares CenturyLink and Level 3 Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CenturyLink	2.20%	8.43%	2.36%
Level 3 Communications	7.85%	5.80%	2.55%

Institutional and Insider Ownership

78.0% of CenturyLink shares are held by institutional investors. 0.6% of CenturyLink shares are held by insiders. Comparatively, 0.5% of Level 3 Communications shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares CenturyLink and Level 3 Communications’ top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
CenturyLink	$16.97 billion	0.70	$6.02 billion	$0.69	31.62
Level 3 Communications	$8.17 billion	2.50	$2.68 billion	$1.76	32.07

CenturyLink has higher revenue and earnings than Level 3 Communications. CenturyLink is trading at a lower price-to-earnings ratio than Level 3 Communications, indicating that it is currently the more affordable of the two stocks.

Dividends

CenturyLink pays an annual dividend of $2.16 per share and has a dividend yield of 9.9%. Level 3 Communications does not pay a dividend. CenturyLink pays out 313.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent ratings for CenturyLink and Level 3 Communications, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CenturyLink	3	5	4	0	2.08
Level 3 Communications	1	11	2	0	2.07

CenturyLink presently has a consensus price target of $25.64, suggesting a potential upside of 17.49%. Level 3 Communications has a consensus price target of $60.76, suggesting a potential upside of 7.63%. Given CenturyLink’s stronger consensus rating and higher probable upside, research analysts clearly believe CenturyLink is more favorable than Level 3 Communications.

Summary

CenturyLink beats Level 3 Communications on 9 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 Level 3 Communications

Level 3 Communications, Inc. is a provider of a range of integrated communications services. The Company’s operating segments include North America, EMEA and Latin America. The North America includes operations in Atlanta, Georgia; Littleton, Colorado; Miami, Florida; Montreal, Canada; New York, New York; Phoenix, Arizona; Pittsburgh, Pennsylvania; Southfield, Michigan, and Tulsa, Oklahoma. The Europe segment includes operations in Basingstoke, England; Crewe, England; Dublin, Ireland; London, England; Amsterdam, The Netherlands, and Paris, France. The Latin America includes operations in Colombia; Buenos Aires, Argentina; Caracas, Venezuela; Lima, Peru; Quito, Ecuador; Santiago, Chile, and Sao Paulo, Brazil. It offers optical, Internet Protocol, computing and storage technologies. It offers a range of communications services, including Internet Protocol (IP) and data services, transport and fiber services, colocation and data center services, security services and voice services.