Financial Comparison: FairPoint Communications (FRP) & Verizon Communications (VZ)

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

Earnings & Valuation

This table compares FairPoint Communications and Verizon Communications’ top-line 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
Verizon Communications $123.64 billion 1.58 $43.95 billion $3.90 12.27

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

Risk and Volatility

FairPoint Communications has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, Verizon Communications has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Profitability

This table compares FairPoint Communications and Verizon Communications’ 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%
Verizon Communications 12.88% 63.06% 6.27%

Dividends

Verizon Communications pays an annual dividend of $2.31 per share and has a dividend yield of 4.8%. FairPoint Communications does not pay a dividend. Verizon Communications pays out 59.2% of its earnings in the form of a dividend. FairPoint Communications has increased its dividend for 10 consecutive years.

Analyst Ratings

This is a summary of current recommendations for FairPoint Communications and Verizon Communications, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FairPoint Communications 0 1 0 0 2.00
Verizon Communications 0 19 5 0 2.21

FairPoint Communications presently has a consensus price target of $17.00, indicating a potential upside of 6.58%. Verizon Communications has a consensus price target of $53.18, indicating a potential upside of 11.11%. Given Verizon Communications’ stronger consensus rating and higher possible upside, analysts plainly believe Verizon Communications is more favorable than FairPoint Communications.

Institutional & Insider Ownership

88.6% of FairPoint Communications shares are held by institutional investors. Comparatively, 62.2% of Verizon Communications shares are held by institutional investors. 7.6% of FairPoint Communications shares are held by company insiders. Comparatively, 0.1% of Verizon Communications shares are held by company 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

Verizon Communications beats FairPoint Communications on 9 of the 14 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 Verizon Communications

Verizon Communications Inc. is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales, to consumer, business and government customers across the United States. The Wireline segment offers voice, data and video communications products and services, such as broadband video, data center and cloud services, security and managed network services, and local and long distance voice services. The Company has combined Yahoo! Inc.’s operating assets with its existing AOL Inc. business to create a new subsidiary, Oath Inc., owns a diverse house of more than 50 media and technology brands. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, Yahoo Finance and Yahoo Mail.

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