Critical Analysis: CyrusOne (CONE) & Communications Sales & Leasing,Inc. (UNIT)

CyrusOne (NASDAQ: CONE) and Communications Sales & Leasing,Inc. (NASDAQ:UNIT) are both mid-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Risk & Volatility

CyrusOne has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500. Comparatively, Communications Sales & Leasing,Inc. has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Valuation and Earnings

This table compares CyrusOne and Communications Sales & Leasing,Inc.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CyrusOne $597.40 million 9.44 $296.60 million ($0.31) -206.51
Communications Sales & Leasing,Inc. $831.65 million 3.94 $681.10 million ($0.32) -58.31

Communications Sales & Leasing,Inc. has higher revenue and earnings than CyrusOne. CyrusOne is trading at a lower price-to-earnings ratio than Communications Sales & Leasing,Inc., indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

96.7% of CyrusOne shares are owned by institutional investors. Comparatively, 68.2% of Communications Sales & Leasing,Inc. shares are owned by institutional investors. 1.6% of CyrusOne shares are owned by insiders. Comparatively, 0.4% of Communications Sales & Leasing,Inc. shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

CyrusOne pays an annual dividend of $1.68 per share and has a dividend yield of 2.6%. Communications Sales & Leasing,Inc. pays an annual dividend of $2.40 per share and has a dividend yield of 12.9%. CyrusOne pays out -541.9% of its earnings in the form of a dividend. Communications Sales & Leasing,Inc. pays out -750.0% 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. Communications Sales & Leasing,Inc. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and price targets for CyrusOne and Communications Sales & Leasing,Inc., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CyrusOne 1 1 10 0 2.75
Communications Sales & Leasing,Inc. 0 1 8 1 3.00

CyrusOne presently has a consensus price target of $61.00, indicating a potential downside of 4.72%. Communications Sales & Leasing,Inc. has a consensus price target of $30.25, indicating a potential upside of 62.11%. Given Communications Sales & Leasing,Inc.’s stronger consensus rating and higher probable upside, analysts plainly believe Communications Sales & Leasing,Inc. is more favorable than CyrusOne.

Profitability

This table compares CyrusOne and Communications Sales & Leasing,Inc.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CyrusOne -4.35% 1.30% 0.52%
Communications Sales & Leasing,Inc. -5.41% N/A -1.29%

Summary

CyrusOne beats Communications Sales & Leasing,Inc. on 9 of the 17 factors compared between the two stocks.

CyrusOne Company Profile

CyrusOne Inc. is a real estate investment trust. The Company is an owner, operator and developer of enterprise-class, carrier-neutral, multi-tenant data center properties. The Company’s data centers are generally purpose-built facilities with redundant power and cooling. The CyrusOne National IX Platform (the National IX Platform) delivers interconnection across states and between metro-enabled sites within its footprint and beyond. The Company has data centers in the United States, London and Singapore. As of December 31, 2016, the Company provided mission-critical data center facilities for 932 customers in 35 data centers and two recovery centers in 11 distinct markets (nine cities in the United States, London and Singapore) with approximately 3,904,000 net rentable square feet (NRSF). The Company provides round the clock security guard monitoring with customizable security features. As of December 31, 2016, the Company had approximately 1,657,000 NRSF under development.

Communications Sales & Leasing,Inc. Company Profile

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.

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