BT Group PLC (NYSE: BT) and FairPoint Communications (NASDAQ:FRP) are both utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.

Analyst Ratings

This is a breakdown of recent recommendations for BT Group PLC and FairPoint Communications, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BT Group PLC 3 7 8 0 2.28
FairPoint Communications 0 1 0 0 2.00

BT Group PLC presently has a consensus price target of $358.82, suggesting a potential upside of 1,764.99%. FairPoint Communications has a consensus price target of $17.00, suggesting a potential upside of 6.58%. Given BT Group PLC’s stronger consensus rating and higher probable upside, equities research analysts clearly believe BT Group PLC is more favorable than FairPoint Communications.

Profitability

This table compares BT Group PLC and FairPoint Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BT Group PLC 7.14% 39.24% 6.77%
FairPoint Communications -11.81% N/A -7.88%

Insider and Institutional Ownership

1.0% of BT Group PLC shares are owned by institutional investors. Comparatively, 88.6% of FairPoint Communications shares are owned by institutional investors. 7.6% of FairPoint Communications shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

BT Group PLC pays an annual dividend of $0.95 per share and has a dividend yield of 4.9%. FairPoint Communications does not pay a dividend. BT Group PLC pays out 91.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BT Group PLC has increased its dividend for 5 consecutive years.

Earnings and Valuation

This table compares BT Group PLC and FairPoint Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BT Group PLC $31.83 billion 1.20 $9.05 billion $1.04 18.50
FairPoint Communications N/A N/A N/A $2.27 7.03

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

Volatility and Risk

BT Group PLC has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500. Comparatively, FairPoint Communications has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500.

Summary

BT Group PLC beats FairPoint Communications on 10 of the 14 factors compared between the two stocks.

About BT Group PLC

BT Group plc is a communications services company. The Company is engaged in selling fixed-voice services, broadband, mobile and television products and services, as well as managed networked information technology (IT) solutions and cyber security protection. Its segments include Consumer, which provides fixed-voice, broadband, TV and mobile services; EE, which is a mobile network operator in the United Kingdom and provides mobile and fixed communications services to consumers; Business and Public Sector, which provides communications and IT services to businesses and the public sector in the United Kingdom and the Republic of Ireland (RoI) ;Global Services, which provides managed networked IT services to corporate customers; Wholesale and Ventures, which provides fixed and mobile services to communications providers (CPs); and Openreach, which provides copper and fiber connections between its exchanges and homes and businesses.

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.

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