Critical Analysis: Spirent (SPMYY) versus AT&T (T)
Spirent (OTCMKTS: SPMYY) and AT&T (NYSE:T) are both computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.
Insider and Institutional Ownership
55.9% of AT&T shares are owned by institutional investors. 1.0% of Spirent shares are owned by company insiders. Comparatively, 0.1% of AT&T shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares Spirent and AT&T’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility & Risk
Spirent has a beta of 0.21, suggesting that its share price is 79% less volatile than the S&P 500. Comparatively, AT&T has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.
This is a breakdown of current ratings for Spirent and AT&T, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
AT&T has a consensus target price of $41.58, indicating a potential upside of 19.93%. Given AT&T’s higher probable upside, analysts clearly believe AT&T is more favorable than Spirent.
Spirent pays an annual dividend of $0.15 per share and has a dividend yield of 2.3%. AT&T pays an annual dividend of $2.00 per share and has a dividend yield of 5.8%. Spirent pays out 71.4% of its earnings in the form of a dividend. AT&T pays out 65.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. AT&T has raised its dividend for 33 consecutive years. AT&T is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Spirent and AT&T’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Spirent||$454.80 million||2.24||$29.00 million||$0.21||31.71|
|AT&T||$160.55 billion||1.33||$29.45 billion||$3.05||11.37|
AT&T has higher revenue and earnings than Spirent. AT&T is trading at a lower price-to-earnings ratio than Spirent, indicating that it is currently the more affordable of the two stocks.
AT&T beats Spirent on 13 of the 16 factors compared between the two stocks.
Spirent Communications plc provides test methodologies and solutions for communication technologies worldwide. The company operates through three segments: Networks & Applications, Wireless & Positioning, and Service Assurance. The Networks & Applications segment develops solutions for functional, performance, and security testing of next-generation networks and applications that simulate real-world conditions in the lab, before a commercial launch, and in the live network. This segment's solutions portfolio addresses data centers, cloud computing, network virtualization, applications and security, high speed Ethernet networks and services, and test automation and management. The Wireless & Positioning segment provides solutions to test the functionality and performance of 4G LTE and 3G mobile devices and services, satellite positioning, navigation, and timing. This segment focuses on wireless devices, wireless services, and satellite navigation and global positioning. The Service Assurance segment develops distributed systems to turn-up new services, and diagnoses and troubleshoots network and customer issues, as well as systems for mobile device management, device analytics, and intelligence solutions for mobile operators. This segment focuses on Ethernet business services, network and customer experience management analytics, and field service test tools. The company was formerly known as Spirent plc and changed its name to Spirent Communications plc in May 2006. Spirent Communications plc was founded in 1936 and is headquartered in Crawley, the United Kingdom.
AT&T Inc. provides communications and digital entertainment services. The company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility, and International. The Business Solutions segment offers wireless services, strategic services, legacy voice, data services, wireless equipment, and other services to multinational companies, governmental and wholesale customers, and individual subscribers. The Entertainment Group segment provides video entertainment and audio programming channels to approximately 25 million subscribers; broadband and Internet services to 13.5 million residential subscribers; local and long-distance voice services to residential customers, as well as DSL Internet access; and voice services provided over IP-based technology. The Consumer Mobility segment offers postpaid and prepaid wireless voice and data communications services to consumers, and wireless wholesale and resale subscribers; consulting, advertising, and application and co-location services; and sells a variety of handsets, wirelessly enabled computers, and personal computer wireless data cards through company-owned stores, agents, or third-party retail stores, as well as accessories, such as carrying cases, hands-free devices, and other items. The International segment offers digital television services, including local and international digital video entertainment and audio programming under the DIRECTV and SKY brands throughout Latin America. This segment offers postpaid and prepaid wireless services in Mexico to approximately 15 million subscribers under the AT&T and Unefon brands; and sells a range of handsets. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.
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