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Investing decisions are made from a mosaic of data, yet synthesizing what matters can be tough. Enter the Fool poll. We show you the Big Headlines; you tell us what's factoring into your investing decisions and help your fellow Fools in the process.
Telecom's twin titans -- AT&T (NYSE: T ) and Verizon (NYSE: VZ ) -- both reported earnings last week. Neither report was well-received. AT&T fell after reporting a sharp slowdown in signing net new customers. Verizon slipped after reporting earnings that were about in line with expectations.
Big Red booked $0.51 in per-share earnings on $26.99 billion in revenue. Post-paid net more than doubled to 906,000 and Verizon now claims 104 million wireless connections, including 88.4 million retail customers. AT&T ended Q1 with 97.5 wireless subscribers.
And yet, looking back, it seems neither company has won the hearts of buyers of Apple's (Nasdaq: AAPL ) iconic iPhone. Both carriers sold millions more handsets to iAddicts in the first quarter, leaving those betting on a reversal of fortune disappointed.
So if these two are more evenly matched than pundits had suspected, the question now is which one is the better buy for long-term investors? Let's dig into the numbers:
|CAPS stars (out of 5)||**||****|
|Normalized net income growth||(10.1%)||(2%)|
|Return on capital||6.9%||7.8%|
|Levered free cash flow||$8,736||$12,570|
Source: Capital IQ, a division of Standard & Poor's.
*All metrics calculated over the trailing 12 months.
^Except for percentages, all numbers in millions.
Three things stand out it this table:
- Both companies produce extraordinary cash flows after accounting for debt, interest, and working capital needs.
- Both pay dividends that yield well above the market average. Meaty dividends tend to pay off well for investors.
- But in terms of relative valuation, analysts expect Verizon to grow profits more than twice as fast as AT&T (excluding the effects of its planned T-Mobile merger) and Sprint Nextel (NYSE: S ) over the next five years.
If you believe Wall Street is right, then Verizon is the no-brainer buy among these three. But are analysts' estimates trustworthy? I'm asking you. Please vote in the poll below and then leave a comment to let us know which telecom stock you'd buy.