Based on the aggregated intelligence of 165,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Telecom New Zealand (NYSE: NZT ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Telecom New Zealand's business and see what CAPS investors are saying about the stock right now.
Telecom New Zealand facts
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Headquarters (founded)
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Auckland, New Zealand (1987)
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Market Cap
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$3.0 billion
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Industry
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Integrated telecommunication services
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Trailing-12-Month Revenue
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$3.7 billion
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Management
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CEO Paul Reynolds
Chief Technology Officer David Havercroft
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Return on Equity (average, past 3 years)
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18.3%
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Cash/Debt
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$260.1 million / $2.0 billion
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Dividend Yield
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11.5%
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Competitors
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Hewlett-Packard (NYSE: HPQ )
IBM (NYSE: IBM )
Vodafone Group (Nasdaq: VOD )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 95% of the 415 members who have rated Telecom New Zealand believe the stock will outperform the S&P 500 going forward. These bulls include the fifth-ranked member in all of CAPS, tenmiles, and Bouncer214.
A few months ago, tenmiles offered several reasons why the valuation seems depressed:
(1) resignation of CFO; (2) recent strength of USD vs. NZD; (3) fear of dividend cut to keep the rating agencies happy; (4) cost associated with government requirements for company to expand services into rural areas ... still, believe recent market spanking is likely overdone for investors with a 3-5 year view.
While Telecom New Zealand holds an enviable position in its home country, the competition isn't exactly small potatoes. Vodafone, for example, continues to own about half of New Zealand's mobile market, versus Telecom New Zealand's 46%. Additionally, global gorillas Hewlett-Packard and IBM have proved to be tough competition for the company's IT services segment, Gen-i, in the battle for corporate contracts. Of course, with a substantially higher dividend yield and historical returns on capital than U.S. telecom counterparts Verizon (NYSE: VZ ) , AT&T (NYSE: T ) , and Sprint (NYSE: S ) , Telecom New Zealand is still very much an attractive foreign alternative.
CAPS member Bouncer214 sums it up :
Significant local market dominance in New Zealand provides a steady base of support. Expansion efforts into Australia and Asia provide for growth in the future. They are the largest telecom provider in New Zealand, the third largest telecom provider in Australia, and are growing in other areas of Asia. Growth is available in both basic services and advanced services, ranging from baseband and cellular communications to cloud computing, off site storage and disaster recovery solutions.
What do you think about Telecom New Zealand, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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