NEW YORK (TheStreet) -- Telecom stocks were in focus on Tuesday after Alcatel-Lucent (ALU), the French telecom equipment company, said it was exploring a merger with Helsinki-based rival Nokia (NOK).
Shares of Alcatel-Lucent surged 13% on the news even though the merger talks aren't all that surprising given that many investors had hoped for this move. Shares of Nokia fell roughly 5% on Tuesday. A merged Alcatel-Lucent/Nokia would likely be worth over €40 billion ($42 billion), bigger than Swedish rival Ericsson (ERIC).
Here are nine other large telecom companies that TheStreet Ratings recommends you buy.
TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.
Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year. Note: Year-to-date returns are based on April 13, 2015 closing prices.
VZ data byYCharts
VZ data byYCharts
1. Verizon Communications Inc. (VZ - Get Report)
Market Cap: $204.6 billion
Rating: Buy, B-
Year-to-date return: 4.8%
Market Cap: $204.6 billion
Rating: Buy, B-
Year-to-date return: 4.8%
Verizon Communications Inc., through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide.
"We rate VERIZON COMMUNICATIONS INC (VZ) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 6.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, VERIZON COMMUNICATIONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 56.61%. Regardless of VZ's high profit margin, it has managed to decrease from the same period last year.
- VERIZON COMMUNICATIONS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC reported lower earnings of $2.51 versus $4.00 in the prior year. This year, the market expects an improvement in earnings ($3.67 versus $2.51).
- In its most recent trading session, VZ has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: VZ Ratings Report
2. Nippon Telegraph & Telephone (NTT - Get Report)
Market Cap: $71.3 billion
Rating: Buy, B-
Year-to-date return: 29.8%
Nippon Telegraph and Telephone Corporation, together with its subsidiaries, provides fixed and mobile voice related services, IP/packet communications services, telecommunications equipment, and system integration and other telecommunications-related services in Japan.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.57, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.08, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has significantly increased by 103.41% to $1,635.40 million when compared to the same quarter last year. In addition, NIPPON TELEGRAPH & TELEPHONE has also vastly surpassed the industry average cash flow growth rate of -27.33%.
- The gross profit margin for NIPPON TELEGRAPH & TELEPHONE is rather high; currently it is at 53.12%. Regardless of NTT's high profit margin, it has managed to decrease from the same period last year.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- You can view the full analysis from the report here: NTT Ratings Report
NTT DOCOMO, Inc. provides mobile telecommunication services through its long term evolution and W-CDMA networks in Japan.
"We rate NTT DOCOMO INC (DCM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels, good cash flow from operations, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DCM's debt-to-equity ratio is very low at 0.06 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, DCM has a quick ratio of 1.78, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has significantly increased by 163.66% to $1,037.65 million when compared to the same quarter last year. In addition, NTT DOCOMO INC has also vastly surpassed the industry average cash flow growth rate of -16.54%.
- Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The gross profit margin for NTT DOCOMO INC is rather high; currently it is at 53.02%. Regardless of DCM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 10.31% trails the industry average.
- You can view the full analysis from the report here: DCM Ratings Report
"We rate CENTURYLINK INC (CTL) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has slightly increased to $1,251.00 million or 8.68% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -27.33%.
- The gross profit margin for CENTURYLINK INC is rather high; currently it is at 56.38%. Regardless of CTL's high profit margin, it has managed to decrease from the same period last year.
- CENTURYLINK INC's earnings per share declined by 19.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CENTURYLINK INC turned its bottom line around by earning $1.35 versus -$0.43 in the prior year. This year, the market expects an improvement in earnings ($2.56 versus $1.35).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.9%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Diversified Telecommunication Services industry average, but is less than that of the S&P 500. The net income has decreased by 21.3% when compared to the same quarter one year ago, dropping from $239.00 million to $188.00 million.
- You can view the full analysis from the report here: CTL Ratings Report
5. Frontier Communications Corp. (FTR - Get Report)
Market Cap: $7.3 billion
Rating: Buy, B
Year-to-date return: 9.9%
Frontier Communications Corporation, a communications company, provides regulated and unregulated voice, data, and video services to residential, business, and wholesale customers in the United States.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 12.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- Compared to its closing price of one year ago, FTR's share price has jumped by 33.51%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- FRONTIER COMMUNICATIONS CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past two years indicate the company has sound management over its earnings and share float. We anticipate the company beginning to experience more growth in the coming year. During the past fiscal year, FRONTIER COMMUNICATIONS CORP increased its bottom line by earning $0.13 versus $0.12 in the prior year. This year, the market expects an improvement in earnings ($0.18 versus $0.13).
- 42.49% is the gross profit margin for FRONTIER COMMUNICATIONS CORP which we consider to be strong. Regardless of FTR's high profit margin, it has managed to decrease from the same period last year.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, FRONTIER COMMUNICATIONS CORP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: FTR Ratings Report
Chunghwa Telecom Co., Ltd. provides integrated telecommunication services primarily in Taiwan.
"We rate CHUNGHWA TELECOM LTD (CHT) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
- CHT's debt-to-equity ratio is very low at 0.01 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.96 is somewhat weak and could be cause for future problems.
- 43.22% is the gross profit margin for CHUNGHWA TELECOM LTD which we consider to be strong. Regardless of CHT's high profit margin, it has managed to decrease from the same period last year.
- CHT, with its decline in revenue, slightly underperformed the industry average of 3.9%. Since the same quarter one year prior, revenues fell by 12.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Diversified Telecommunication Services industry average, but is less than that of the S&P 500. The net income has significantly decreased by 39.3% when compared to the same quarter one year ago, falling from $359.75 million to $218.44 million.
- In its most recent trading session, CHT has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- You can view the full analysis from the report here: CHT Ratings Report
BCE Inc., a telecommunications and media company, provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. The company operates through Bell Wireless, Bell Wireline, and Bell Media segments.
"We rate BCE INC (BCE) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- BCE's revenue growth has slightly outpaced the industry average of 3.9%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 10.2% when compared to the same quarter one year prior, going from $528.00 million to $582.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Diversified Telecommunication Services industry and the overall market on the basis of return on equity, BCE INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- 46.20% is the gross profit margin for BCE INC which we consider to be strong. Regardless of BCE's high profit margin, it has managed to decrease from the same period last year.
- BCE INC reported flat earnings per share in the most recent quarter. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, BCE INC increased its bottom line by earning $2.97 versus $2.54 in the prior year.
- You can view the full analysis from the report here: BCE Ratings Report
8. PT Telekomunikasi Indonesia Tbk (TLK - Get Report)
Market Cap: $21.4 billion
Rating: Buy, B+
Year-to-date return: -0.43%
PT Telekomunikasi Indonesia Tbk engages in telecommunications, information, and media and edutainment businesses worldwide.
"We rate TELEKOMUNIKASI INDONESIA (TLK) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, increase in net income, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.9%. Since the same quarter one year prior, revenues rose by 37.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 33.3% when compared to the same quarter one year prior, rising from $241.23 million to $321.64 million.
- Net operating cash flow has significantly increased by 71.42% to $804.18 million when compared to the same quarter last year. In addition, TELEKOMUNIKASI INDONESIA has also vastly surpassed the industry average cash flow growth rate of -27.33%.
- The gross profit margin for TELEKOMUNIKASI INDONESIA is rather high; currently it is at 56.94%. Regardless of TLK's high profit margin, it has managed to decrease from the same period last year.
- You can view the full analysis from the report here: TLK Ratings Report
9. SK Telecom Co. (SKM - Get Report)
Market Cap: $17.4 billion
Rating: Buy, A-
Year-to-date return: -1.9%
SK Telecom Co., Ltd. provides wireless telecommunications services in Korea.
"We rate SK TELECOM CO LTD (SKM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, increase in net income, attractive valuation levels, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Powered by its strong earnings growth of 32.65% and other important driving factors, this stock has surged by 25.10% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Wireless Telecommunication Services industry. The net income increased by 31.2% when compared to the same quarter one year prior, rising from $318.84 million to $418.45 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Wireless Telecommunication Services industry and the overall market on the basis of return on equity, SK TELECOM CO LTD has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- SK TELECOM CO LTD has improved earnings per share by 32.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, SK TELECOM CO LTD increased its bottom line by earning $2.57 versus $2.17 in the prior year. For the next year, the market is expecting a contraction of 5.5% in earnings ($2.43 versus $2.57).
- You can view the full analysis from the report here: SKM Ratings Report
By Laurie Kulikowski
No comments:
Post a Comment