Lumen Technologies (NYSE:LUMN) versus Bandwidth (NASDAQ:BAND) Critical Review

Bandwidth (NASDAQ:BAND) and Lumen Technologies (NYSE:LUMN) are both communication services companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitability.

Earnings & Valuation

This table compares Bandwidth and Lumen Technologies”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bandwidth	$753.82 million	1.83	-$12.91 million	($0.12)	-358.08
Lumen Technologies	$11.83 billion	0.42	-$1.74 billion	($1.02)	-4.74

Bandwidth has higher earnings, but lower revenue than Lumen Technologies. Bandwidth is trading at a lower price-to-earnings ratio than Lumen Technologies, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Bandwidth has a beta of 3.01, suggesting that its stock price is 201% more volatile than the S&P 500. Comparatively, Lumen Technologies has a beta of 1.84, suggesting that its stock price is 84% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and target prices for Bandwidth and Lumen Technologies, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bandwidth	1	4	4	0	2.33
Lumen Technologies	1	10	0	0	1.91

Bandwidth presently has a consensus target price of $66.67, suggesting a potential upside of 55.15%. Lumen Technologies has a consensus target price of $7.38, suggesting a potential upside of 52.69%. Given Bandwidth’s stronger consensus rating and higher possible upside, equities analysts clearly believe Bandwidth is more favorable than Lumen Technologies.

Profitability

This table compares Bandwidth and Lumen Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bandwidth	0.27%	1.85%	0.70%
Lumen Technologies	-8.65%	N/A	-1.56%

Insider and Institutional Ownership

68.5% of Bandwidth shares are owned by institutional investors. Comparatively, 66.2% of Lumen Technologies shares are owned by institutional investors. 5.3% of Bandwidth shares are owned by company insiders. Comparatively, 2.3% of Lumen Technologies shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Bandwidth beats Lumen Technologies on 12 of the 14 factors compared between the two stocks.

About Bandwidth

Bandwidth is a leading enterprise cloud communications company. Companies like Cisco, Google, Microsoft, RingCentral, Uber, and Zoom use Bandwidth’s APIs to easily embed voice, messaging, and emergency services into software and applications. Bandwidth is the first and only CPaaS provider offering a robust selection of communications APIs built around their own IP voice network.

About Lumen Technologies

Lumen Technologies, Inc., a facilities-based technology and communications company, provides various integrated products and services to business and residential customers in the United States and internationally. The company operates in two segments, Business and Mass Markets. It offers dark fiber, edge cloud services, internet protocol, managed security, software-defined wide area networks, secure access service edge, unified communications and collaboration, and optical wavelengths services; ethernet and VPN data networks services; and legacy services to manage cash flow, including time division multiplexing voice, private line, and other legacy services, as well as sells communication equipment, and IT solutions. The company also provides high speed and lower speed broadband service to residential and small business customers; local and long-distance voice services, professional services, and other ancillary services; and federal broadband and state support programs. It serves its products and services under the Lumen, Quantum Fiber, and CenturyLink brands. The company was formerly known as CenturyLink, Inc. and changed its name to Lumen Technologies, Inc. in September 2020. Lumen Technologies, Inc. was incorporated in 1968 and is headquartered in Monroe, Louisiana.