CenturyLink (CTL) and Its Competitors Critical Review

CenturyLink (NYSE: CTL) is one of 45 public companies in the “Integrated Telecommunications Services” industry, but how does it weigh in compared to its rivals? We will compare CenturyLink to related companies based on the strength of its earnings, dividends, institutional ownership, valuation, profitability, risk and analyst recommendations.

Dividends

CenturyLink pays an annual dividend of $2.16 per share and has a dividend yield of 10.6%. 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. As a group, “Integrated Telecommunications Services” companies pay a dividend yield of 4.8% and pay out 1,357.5% of their earnings in the form of a dividend. CenturyLink is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Risk and Volatility

CenturyLink has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, CenturyLink’s rivals have a beta of 0.95, meaning that their average share price is 5% less volatile than the S&P 500.

Earnings & Valuation

This table compares CenturyLink and its rivals gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
CenturyLink $16.97 billion $6.06 billion 29.45
CenturyLink Competitors $13.52 billion $4.52 billion 5.22

CenturyLink has higher revenue and earnings than its rivals. CenturyLink is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Insider & Institutional Ownership

83.0% of CenturyLink shares are held by institutional investors. Comparatively, 58.3% of shares of all “Integrated Telecommunications Services” companies are held by institutional investors. 0.6% of CenturyLink shares are held by insiders. Comparatively, 4.5% of shares of all “Integrated Telecommunications Services” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares CenturyLink and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CenturyLink 2.20% 8.43% 2.36%
CenturyLink Competitors 0.59% -0.73% 1.36%

Analyst Recommendations

This is a summary of recent ratings for CenturyLink and its rivals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CenturyLink 3 7 4 0 2.07
CenturyLink Competitors 531 1524 1824 65 2.36

CenturyLink presently has a consensus price target of $24.67, indicating a potential upside of 21.39%. As a group, “Integrated Telecommunications Services” companies have a potential upside of 44.45%. Given CenturyLink’s rivals stronger consensus rating and higher probable upside, analysts plainly believe CenturyLink has less favorable growth aspects than its rivals.

Summary

CenturyLink beats its rivals on 9 of the 15 factors compared.

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.

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