Shaw Communications (NYSE: SJR) and Level 3 Communications (NYSE:LVLT) are both large-cap consumer discretionary companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Insider and Institutional Ownership

51.9% of Shaw Communications shares are held by institutional investors. Comparatively, 98.7% of Level 3 Communications shares are held by institutional investors. 1.0% of Shaw Communications shares are held by insiders. Comparatively, 0.5% of Level 3 Communications shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Shaw Communications and Level 3 Communications, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shaw Communications 1 3 3 0 2.29
Level 3 Communications 1 11 2 0 2.07

Shaw Communications currently has a consensus price target of $27.33, indicating a potential upside of 23.85%. Level 3 Communications has a consensus price target of $61.03, indicating a potential upside of 11.13%. Given Shaw Communications’ stronger consensus rating and higher probable upside, research analysts clearly believe Shaw Communications is more favorable than Level 3 Communications.

Profitability

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

Net Margins Return on Equity Return on Assets
Shaw Communications 10.01% 9.31% 3.57%
Level 3 Communications 7.85% 5.80% 2.55%

Risk & Volatility

Shaw Communications has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Level 3 Communications has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.

Valuation and Earnings

This table compares Shaw Communications and Level 3 Communications’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Shaw Communications $4.13 billion 2.64 $1.65 billion $0.80 27.59
Level 3 Communications $8.17 billion 2.44 $2.66 billion $1.76 31.20

Level 3 Communications has higher revenue and earnings than Shaw Communications. Shaw Communications 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

Shaw Communications pays an annual dividend of $0.95 per share and has a dividend yield of 4.3%. Level 3 Communications does not pay a dividend. Shaw Communications pays out 118.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Shaw Communications beats Level 3 Communications on 9 of the 16 factors compared between the two stocks.

Shaw Communications Company Profile

Shaw Communications Inc. (Shaw) is a diversified connectivity provider. The Company operates through four divisions: Consumer, Wireless, Business Network Services and Business Infrastructure Services. Under the Consumer division, the Company offers Cable telecommunications and Satellite video services to residential customers. Its Business Network Services division offers data networking, Cable telecommunications, Satellite video and fleet tracking services to businesses and public sector entities. Its Business Infrastructure Services division offers data center colocation, cloud technology and managed information technology (IT) solutions to businesses. The Company offers wireless services for voice and data communications through its Wireless division. Its wireline services offer approximately 120 high definition (HD) channels and over 10,000 on-demand, pay-per-view and subscription movie and television programming titles.

Level 3 Communications Company Profile

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.

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