Financial Comparison: CenturyLink (CTL) & Cincinnati Bell (CBB)

CenturyLink (NYSE: CTL) and Cincinnati Bell (NYSE:CBB) are both computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, analyst recommendations, institutional ownership, risk and valuation.

Valuation and Earnings

This table compares CenturyLink and Cincinnati Bell’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
CenturyLink	$16.97 billion	0.62	$6.06 billion	$0.69	27.83
Cincinnati Bell	$1.17 billion	0.74	$282.90 million	$1.65	12.45

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

Analyst Recommendations

This is a summary of recent ratings and target prices for CenturyLink and Cincinnati Bell, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CenturyLink	3	6	4	0	2.08
Cincinnati Bell	2	2	1	0	1.80

CenturyLink currently has a consensus target price of $25.64, suggesting a potential upside of 33.52%. Cincinnati Bell has a consensus target price of $23.50, suggesting a potential upside of 14.36%. Given CenturyLink’s stronger consensus rating and higher possible upside, analysts plainly believe CenturyLink is more favorable than Cincinnati Bell.

Dividends

CenturyLink pays an annual dividend of $2.16 per share and has a dividend yield of 11.3%. Cincinnati Bell 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.

Volatility & Risk

CenturyLink has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Cincinnati Bell has a beta of 1.66, meaning that its share price is 66% more volatile than the S&P 500.

Profitability

This table compares CenturyLink and Cincinnati Bell’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CenturyLink	2.20%	8.43%	2.36%
Cincinnati Bell	6.84%	-3.87%	0.70%

Institutional and Insider Ownership

77.8% of CenturyLink shares are owned by institutional investors. Comparatively, 85.1% of Cincinnati Bell shares are owned by institutional investors. 0.6% of CenturyLink shares are owned by insiders. Comparatively, 1.4% of Cincinnati Bell shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

CenturyLink beats Cincinnati Bell on 9 of the 16 factors compared between the two stocks.

CenturyLink Company Profile

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.

Cincinnati Bell Company Profile

Cincinnati Bell Inc., along with its subsidiaries, provides diversified telecommunications and technology services. The Company operates through two segments: Entertainment and Communications, and IT Services and Hardware. Through its Entertainment and Communications segment, the Company provides high-speed data, video and voice solutions to consumers and businesses over fiber network and a legacy copper network. The IT Services and Hardware segments operates through its subsidiary, Cincinnati Bell Technology Solutions Inc. (CBTS), which is engaged in the sale and service of end-to-end communications and information technology (IT) systems and solutions for business customers across the United States. The Company has interest in CyrusOne Inc., which operates carrier-neutral data center colocation business.