BCE Inc. (USA) (BCE), CenturyLink, Inc. (CTL), AT&T Inc. (T): The Telecommunications Services Sector Untethered and Poised to Grow

This article will look for undervalued and fairly valued individual companies within the general sector 50-Telecommunications Services. Within this general sector, there are several subsectors, which I list as follows:

Telecommunications Services Conservative

There were only five companies in the Telecommunications Services sector that I felt worthy of further scrutiny by the dividend growth investor.  Consequently, instead of featuring a few companies on the conservative list, I will provide fundamental-oriented graphs on all five.  However, due to all of the changes within this industry referenced above, historical capital appreciation performance, with the exception of Telus Corp (TU), has been below average.  On the other hand, the dividend records of most of these selections have been reasonably consistent, with the exception of CenturyLink Inc (CTL).  Consequently, the only performance that I will report will be the annualized performance reported on the portfolio review below.  Note that this number includes capital appreciation and dividend income.  However, later when I show the Earnings and Price Correlated FAST Graphs™ on each of the following companies, I draw the reader’s attention to the pink line which plots dividends per share.  The actual dividends per share are also listed at the bottom of the graphs.

What follows is a graphical look at important fundamentals and metrics on each of the five selections on my conservative list.  I will provide a brief description of each company, courtesy of Capital IQ, followed by a series of Earnings and Price Correlated graphs.  For those not familiar with the FAST Graphs™research tool, here is a brief description and a link for those that would like to know more:

The Orange Line and Green Shaded Area

First, F.A.S.T. Graphs™ plots the earnings of the company and calculates its growth rate for the time period being graphed.  Then as a metaphor for intrinsic value, an orange line with white triangles is drawn based on applying widely-accepted formulas for valuing a business.  The orange line represents the same P/E ratio on every point on the graph and is also reported in the orange rectangle in the FAST FACTS box to the right. The green shaded area is simply a mountain chart of the company’s earnings each year.

Finally, I will provide FUN Graphs (Fundamental Underlying Numbers), reflecting metrics relevant to each selection’s potential to maintain and/or grow future dividends.

BCE Inc. (USA) (NYSE:BCE):  Company Description

“BCE Inc. (USA) (NYSE:BCE) provides communications solutions to residential, business, and wholesale customers primarily in Canada. The company offers local and long distance telephone services under the Bell Home Phone brand; direct-to-home satellite television (TV) services under the Bell TV name; Internet protocol TV services under the Bell Fibe TV brand; and personal video recorders and online access services. It also provides data services, including Internet access services under the Bell Internet name; Internet protocol based services; and information and communications technology solutions. In addition, the company engages in the rental, sale, and maintenance of business terminal equipment; sale of TV set-top boxes; and provision of network installation and maintenance services for third parties. Additionally, it offers wireless voice and data communications products and services.“

BCE Inc. (USA) (NYSE:BCE):  Earnings and Price Correlated Graph

BCE Inc:  Capital Expenditures (capx)

The changing Telecommunications’ landscape has required significant capital investment.  Note how capex has increased over the last four years from 2.73 Billion in fiscal 2009 to 3.53 Billion in fiscal 2012.

BCE Inc:  Common Shares Outstanding (csho)

In order to fund the necessary capex, BCE Inc. (USA) (NYSE:BCE) Inc increased their common shares outstanding (csho) significantly in 2012.  More recently since fiscal 2006 the company has embarked on a share count reduction.

BCE Inc:  Cash Flow (cfl) and Income Before Extraordinary Items Available For Common (ibcom)