Critical Review: Spark New Zealand (OTCMKTS:SPKKY) and Consolidated Communications (OTCMKTS:CNSL)

Spark New Zealand (OTCMKTS:SPKKY) and Consolidated Communications (NASDAQ:CNSL) are both utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitability.

Analyst Recommendations

This is a breakdown of current recommendations for Spark New Zealand and Consolidated Communications, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spark New Zealand 1 0 0 0 1.00
Consolidated Communications 1 1 1 0 2.00

Consolidated Communications has a consensus price target of $5.75, suggesting a potential upside of 36.90%. Given Consolidated Communications’ stronger consensus rating and higher possible upside, analysts clearly believe Consolidated Communications is more favorable than Spark New Zealand.

Profitability

This table compares Spark New Zealand and Consolidated Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Spark New Zealand N/A N/A N/A
Consolidated Communications -2.10% -2.94% -0.32%

Dividends

Spark New Zealand pays an annual dividend of $0.55 per share and has a dividend yield of 3.9%. Consolidated Communications does not pay a dividend. Spark New Zealand pays out 74.3% of its earnings in the form of a dividend.

Volatility & Risk

Spark New Zealand has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, Consolidated Communications has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500.

Insider and Institutional Ownership

0.4% of Spark New Zealand shares are held by institutional investors. Comparatively, 78.8% of Consolidated Communications shares are held by institutional investors. 3.1% of Consolidated Communications shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Spark New Zealand and Consolidated Communications’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Spark New Zealand $2.34 billion 2.20 $274.27 million $0.74 18.92
Consolidated Communications $1.40 billion 0.22 -$50.83 million ($0.42) -10.00

Spark New Zealand has higher revenue and earnings than Consolidated Communications. Consolidated Communications is trading at a lower price-to-earnings ratio than Spark New Zealand, indicating that it is currently the more affordable of the two stocks.

Summary

Spark New Zealand beats Consolidated Communications on 9 of the 16 factors compared between the two stocks.

Spark New Zealand Company Profile

Spark New Zealand Limited, together with its subsidiaries, provides telecommunications, and information and communications technology (ICT) products and services primarily in New Zealand. The company's Spark Home, Mobile & Business segment offers a range of services and content, data, and voice services across fiber, wireless, and copper broadband, mobile, online video entertainment, and nationwide Wi-Fi zones to consumer and small business customers. Its Spark Digital segment integrates IT and telecommunications services to provide converged ICT solutions for clients. The company's Spark Connect & Platforms segment engages in the Spark's network and IT operations, shared business operations, and digital and service transformation activities. Its Spark Ventures & Wholesale segment develops a portfolio of businesses; and engages in the servicing and stewardship of Spark's wholesale products and services. The company also offers IT infrastructure, business cloud, business telecommunications, outsourced telecommunications, subscription video-on-demand, big data analytics and marketing automation, IT infrastructure and data center, and international wholesale telecommunications services. In addition, it provides local, national, and international telephone and data services; and retails telecommunications products and services. The company was formerly known as Telecom Corporation of New Zealand Limited and changed its name to Spark New Zealand Limited in August 2014. Spark New Zealand Limited was founded in 1987 and is based in Auckland, New Zealand.

Consolidated Communications Company Profile

Consolidated Communications Holdings, Inc., through its subsidiaries, provides telecommunications services to business and residential customers in the United States. It offers high-speed broadband Internet access and voice over Internet protocol (VoIP) phone services to small, medium, and large business customers; commercial data connectivity services in select markets, including a portfolio of Ethernet services, software defined wide area network, multi-protocol label switching, and private line services; and wholesale services to regional and national interexchange and wireless carriers, including cellular backhaul, dark fiber, and other fiber transport solutions. The company also provides voice services that include local phone and long-distance service packages for business customers; and sells business equipment and provides related hardware and maintenance support, video, and other miscellaneous services, as well as rents customer premises equipment. In addition, it offers video services, which consist of high-definition television, digital video recorders (DVR), and/or a whole home DVR; other in-demand streaming content; and network access services, including interstate and intrastate switched access, network special access, and end user access. Further, the company engages in telephone directory publishing, video advertising, billing and support services, and other miscellaneous activities. As of December 31, 2018, it had approximately 902 thousand voice connections, 779 thousand data connections, and 93 thousand video connections. The company serves customers in consumer, commercial, and carrier channels. Consolidated Communications Holdings, Inc. was founded in 1894 and is headquartered in Mattoon, Illinois.

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