Hawaiian Telcom Holdco (NASDAQ: HCOM) and Vonage Holdings Corp. (NYSE:VG) are both small-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitabiliy.

Institutional and Insider Ownership

68.8% of Hawaiian Telcom Holdco shares are owned by institutional investors. Comparatively, 76.8% of Vonage Holdings Corp. shares are owned by institutional investors. 26.0% of Hawaiian Telcom Holdco shares are owned by company insiders. Comparatively, 14.1% of Vonage Holdings Corp. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Hawaiian Telcom Holdco and Vonage Holdings Corp., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Hawaiian Telcom Holdco 0 1 0 0 2.00
Vonage Holdings Corp. 0 0 4 0 3.00

Vonage Holdings Corp. has a consensus target price of $8.50, indicating a potential upside of 0.95%. Given Vonage Holdings Corp.’s stronger consensus rating and higher probable upside, analysts clearly believe Vonage Holdings Corp. is more favorable than Hawaiian Telcom Holdco.

Earnings and Valuation

This table compares Hawaiian Telcom Holdco and Vonage Holdings Corp.’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Hawaiian Telcom Holdco $388.68 million 0.93 $109.16 million ($0.08) -389.38
Vonage Holdings Corp. $972.14 million 1.92 $100.53 million $0.08 105.26

Hawaiian Telcom Holdco has higher revenue, but lower earnings than Vonage Holdings Corp.. Hawaiian Telcom Holdco is trading at a lower price-to-earnings ratio than Vonage Holdings Corp., indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Hawaiian Telcom Holdco has a beta of 1.16, meaning that its share price is 16% more volatile than the S&P 500. Comparatively, Vonage Holdings Corp. has a beta of -0.01, meaning that its share price is 101% less volatile than the S&P 500.

Profitability

This table compares Hawaiian Telcom Holdco and Vonage Holdings Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Hawaiian Telcom Holdco -0.25% -0.32% -0.12%
Vonage Holdings Corp. 2.00% 12.40% 5.95%

Summary

Vonage Holdings Corp. beats Hawaiian Telcom Holdco on 10 of the 13 factors compared between the two stocks.

About Hawaiian Telcom Holdco

Hawaiian Telcom Holdco, Inc. is a provider of communications services and products in Hawaii. The Company operates through two business segments: Telecommunications and Data Center Colocation. The Telecommunications segment provides local telephone service, including voice and data transport, custom calling features, network access, directory assistance and private lines. In addition, the segment provides Internet, long distance services, television service, Internet protocol (IP)-based network services, customer premises equipment, data solutions, managed services, billing and collection, wireless services and pay telephone services. The Data Center Colocation segment consists of data center services, including colocation and virtual private cloud. As of December 31, 2016, its telecommunications operations served approximately 296,000 voice access lines, 19,000 business Voice over Internet Protocol (VoIP) lines, 111,000 high-speed Internet lines, and 42,000 video subscribers.

About Vonage Holdings Corp.

Vonage Holdings Corp. is a provider of cloud communications services for businesses and consumers, and consumer and communication solutions across multiple devices. The Company operates through two segments: Business and Consumer. For business services customers, the Company provides cloud-based unified communications as a service (UCaaS) solutions, consisting of integrated voice, text, video, data, collaboration, and mobile applications over its scalable session initiation protocol (SIP) based voice over Internet protocol (VoIP) network. It serves a range of the business market, including the small and medium business (SMB), mid-market and enterprise segments. Through its cloud-based middleware solution, gUnify, the Company provides customers the ability to integrate its cloud communications platform with various cloud-based productivity and customer relationship management (CRM) solutions, including Google’s G Suite, Zendesk, Salesforce’s Sales Cloud, Oracle and Clio.

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