Critical Review: Communications Sales & Leasing,Inc. (UNIT) versus InfraREIT (HIFR)
Communications Sales & Leasing,Inc. (NASDAQ: UNIT) and InfraREIT (NYSE:HIFR) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.
Communications Sales & Leasing,Inc. pays an annual dividend of $2.40 per share and has a dividend yield of 14.5%. InfraREIT pays an annual dividend of $1.00 per share and has a dividend yield of 4.5%. Communications Sales & Leasing,Inc. pays out -750.0% of its earnings in the form of a dividend. InfraREIT pays out 83.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Communications Sales & Leasing,Inc. is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of current ratings and price targets for Communications Sales & Leasing,Inc. and InfraREIT, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Communications Sales & Leasing,Inc.||0||1||8||1||3.00|
Communications Sales & Leasing,Inc. presently has a consensus price target of $30.25, suggesting a potential upside of 83.22%. InfraREIT has a consensus price target of $22.00, suggesting a potential downside of 1.03%. Given Communications Sales & Leasing,Inc.’s stronger consensus rating and higher possible upside, analysts plainly believe Communications Sales & Leasing,Inc. is more favorable than InfraREIT.
This table compares Communications Sales & Leasing,Inc. and InfraREIT’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Communications Sales & Leasing,Inc.||-5.41%||N/A||-1.29%|
Insider and Institutional Ownership
68.2% of Communications Sales & Leasing,Inc. shares are owned by institutional investors. Comparatively, 83.8% of InfraREIT shares are owned by institutional investors. 0.4% of Communications Sales & Leasing,Inc. shares are owned by company insiders. Comparatively, 28.0% of InfraREIT shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Risk & Volatility
Communications Sales & Leasing,Inc. has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500. Comparatively, InfraREIT has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500.
Earnings & Valuation
This table compares Communications Sales & Leasing,Inc. and InfraREIT’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Communications Sales & Leasing,Inc.||$831.65 million||3.48||$681.10 million||($0.32)||-51.59|
|InfraREIT||$184.70 million||5.27||$160.52 million||$1.20||18.53|
Communications Sales & Leasing,Inc. has higher revenue and earnings than InfraREIT. Communications Sales & Leasing,Inc. is trading at a lower price-to-earnings ratio than InfraREIT, indicating that it is currently the more affordable of the two stocks.
Communications Sales & Leasing,Inc. beats InfraREIT on 9 of the 16 factors compared between the two stocks.
About Communications Sales & Leasing,Inc.
Uniti Group Inc., formerly Communications Sales & Leasing, Inc., is an internally managed real estate investment trust engaged in the acquisition and construction of infrastructure in the communications industry. The Company focuses on acquiring and constructing fiber optic broadband networks, wireless communications towers, copper and coaxial broadband networks and data centers. It operates in four segments: Leasing, Fiber Infrastructure, Towers and Consumer Competitive Local Exchange Carrier (Consumer CLEC). The Leasing segment includes Uniti Leasing. The Fiber Infrastructure segment includes Uniti Fiber business. The Towers segment includes Uniti Towers and its ground lease investments. The Consumer CLEC segment includes Talk America. As of July 3, 2017, the Company and its subsidiaries owned approximately 88,100 fiber network route miles, representing approximately 4.8 million fiber strand miles and approximately 231,900 route miles of copper cable lines across 32 states.
InfraREIT, Inc. is a real estate investment trust. The Company is engaged in owning and leasing rate-regulated transmission and distribution (T&D) assets in Texas. It leases its T&D assets to Sharyland Utilities, L.P. Its assets are located in the Texas Panhandle near Amarillo, the Permian Basin in and around Stanton, Central Texas around Brady, Northeast Texas in and around Celeste and South Texas near McAllen. As of December 31, 2016, its T&D assets consisted of approximately 54,000 electricity delivery points, approximately 815 circuit miles of transmission lines, approximately 40,500 circuit miles of distribution lines, 57 substations and a 300 megawatt high-voltage direct current (DC) Tie between Texas and Mexico (Railroad DC Tie). As of December 31, 2016, its T&D assets in each of its leases included S/B/C Lease, McAllen Lease, competitive renewable energy zone (CREZ) Lease, Stanton Transmission Loop Lease and Electric Reliability Council of Texas (ERCOT) Transmission Lease.
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