S&P 500 Telecommunication Services Index
In this series, we’ll look broadly at the market-centric metrics of US telecom players. Let’s start with the returns of US telecom players in the S&P 500 Index. Over the last few months, US telecom stocks have generated more returns than the broader index.
Year-to-date, the returns of the S&P 500 Telecommunication Services Index and the S&P 500 were ~14.8% and ~0.8%, respectively, as of March 18, 2016. Meanwhile, the forward PE (price-to-earnings ratio) of the S&P 500 Telecommunication Services Index was ~4.2%, below its average ten-year weekly point.
Telecom companies in SPY
Enterprise value multiples
As of March 18, the current year EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiples of the integrated telecom players AT&T and Verizon were ~6.6x and ~7x, respectively.
Meanwhile, CenturyLink and Frontier Communications had comparable metrics at ~5.6x and ~5.5x, respectively. As of March 18, Level 3 Communications was trading at a current year EV-to-EBITDA multiple of ~10.2x.
Now let’s look at the forward dividend yields of the US telecom players in the S&P 500. As of March 18, 2016, the dividend yield metrics for AT&T and Verizon were at ~5% and ~4.3%, respectively.
As of the same date, CenturyLink and Frontier Communications had forward dividend yields of ~6.8% and ~8%, respectively.