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"One definition of man is ''an intelligence served by organs.''"

Ralph Waldo Emerson

China Mobile Limited provides mobile telecommunications and related services chiefly in Mainland China. It is an attractive play for many reasons, some of which are:

China Mobile is the world's largest cellular phone operator with over 600 million customers.

While cell phones are close to hitting the saturation point in the West, this is not the case in China. With thousands of Chinese joining the middle class ranks every month demand for cell phones will be robust for years to come. Mobile phone penetration in China is at roughly 74% but smart phone penetration is 10%, so there is a lot of room for growth here.

Its penetration of the rural markets is also growing and it's witnessing increased usage of value added businesses such as mobile video and mobile gaming. Let's not forget it also sports a decent yield of 4%.

Reason to be bullish on China Mobile Ltd (CHL):

  • It has massive levered free cash flow of 11.77 billion.
  • A decent quarterly revenue growth rate of 8%.
  • Operating margins of 29.7%.
  • Profit margins of 23.84%.
  • A decent yield of 4%.
  • A good 52-week relative strength score of 81 out of a possible 100.
  • A strong five year dividend growth rate of 27.55%.
  • Net income has increased from $16.5 billion in 2008 to $19.57 billion in 2011.
  • A 5 year cash flow average of $6.26.
  • Cash flow has increased from $7.17 in 2009 to $7.80 in 2011.
  • A good five year sales growth average of 16%.
  • Sales have increased from $6.6 billion in 2009 to $8.1 billion in 2011.
  • A good payout ratio of 37%.
  • It sports a five year revenue growth rate of 16.3%.
  • An excellent long-term debt to equity ratio of 0.05.
  • Annual EPS before NRI has surged from $2.82 in 2007 to $4.86 in 2011.
  • A decent ROE of 20%.
  • It has a five year EPS growth rate of 17%.
  • It has over $50 billion in cash.
  • $100K invested for 10 years would have grown to $532k.

Company: China Mobile

Levered Free Cash Flow = $11.77B

Basic Key ratios

  1. Relative Strength 52 weeks = 81
  2. Dividend 5-year Growth = 27.55
  3. Cash Flow 5 -year Average = 6.26
  4. Dividend Yield 5-Year Average = 2.78

Growth

  1. Net Income ($mil) 12/2011 = 19527
  2. Net Income ($mil) 12/2010 = 17752
  3. Net Income ($mil) 12/2009 = 16921
  4. Net income ($mil) 12/2008= 16570
  1. EBITDA ($mil) 12/2011 = 40290
  2. EBITDA ($mil) 12/2010 = 36333
  3. EBITDA ($mil) 12/2009 = 34353
  1. Annual Net Income this Yr/ Net Income last Yr = 10
  2. Cash Flow ($/share) 12/2011 = 7.80
  3. Cash Flow ($/share) 12/2010 = 7.62
  4. Cash Flow ($/share) 12/2009 = 7.17
  1. Sales ($mil) 12/2011 = 81840
  2. Sales ($mil) 12/2010 = 71766
  3. Sales ($mil) 12/2009 = 66459
  1. Annual EPS before NRI 12/2007 = 2.82
  2. Annual EPS before NRI 12/2008 = N/A
  3. Annual EPS before NRI 12/2009 = 4.15
  4. Annual EPS before NRI 12/2010 = 4.36
  5. Annual EPS before NRI 12/2011 = 4.86

Dividend history

  1. Dividend Yield = 3.44
  2. Dividend Yield 5 Year Average 12/2011 = 2.78
  3. Dividend Yield 5 Year Average 09/2011 = 2.78
  4. Annual Dividend 12/2011 = 1.84
  5. Annual Dividend 12/2010 = 1.66
  6. Forward Yield = 3.44
  7. Dividend 5 year Growth 12/2011 = 27.55

Dividend sustainability

  1. Payout Ratio =37%

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = 10.85
  2. Next 3-5 Year Estimate EPS Growth rate = 1.1
  3. Debt/Total Cap 5 Year Average 12/2011 = 6.65
  4. Debt/Total Cap 5 Year Average 09/2011 = 6.65
  5. Debt/Total Cap 5 Year Average 06/2011 = 6.65
  1. Current Ratio = 1.3
  2. Current Ratio 5 Year Average = 1.33
  3. Quick Ratio = 1.24
  4. Cash Ratio = 1.21
  5. Interest Coverage Quarterly = N/A

Valuation

  1. Book Value = 25.62
  2. Price/ Book = 2.13
  3. Price/ Cash Flow = 6.19
  4. Price/ Sales = 2.58

Company: CenturyLink Inc (CTL)

Levered Free Cash Flow = $2.68B

Basic Key ratios

  1. Percentage Held by Insiders = 0.28
  2. Number of Institutional Sellers 12 Weeks = 11
  3. Relative Strength 52 weeks = 57
  4. Dividend 5-year Growth = 72.26
  5. Cash Flow 5 -year Average = 7.02
  6. Dividend Yield 5-Year Average = 6.11

Growth

  1. Net Income ($mil) 12/2011 = 573
  2. Net Income ($mil) 12/2010 = 948
  3. Net Income ($mil) 12/2009 = 647
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = -40.69
  5. Quarterly Net Income this Quarterly/same Quarter year ago = -51.59
  1. EBITDA ($mil) 12/2011 = 6046
  2. EBITDA ($mil) 12/2010 = 3509
  3. EBITDA ($mil) 12/2009 = 2155
  4. Net Income Reported Quarterlytr ($mil) = 109
  5. Annual Net Income this Yr/ Net Income last Yr = -39.56
  6. Cash Flow ($/share) 12/2011 = 8.43
  7. Cash Flow ($/share) 12/2010 = 8.12
  8. Cash Flow ($/share) 12/2009 = 5.7
  1. Sales ($mil) 12/2011 = 15351
  2. Sales ($mil) 12/2010 = 7042
  3. Sales ($mil) 12/2009 = 4974
  1. Annual EPS before NRI 12/2007 = 3.16
  2. Annual EPS before NRI 12/2008 = 3.37
  3. Annual EPS before NRI 12/2009 = 3.6
  4. Annual EPS before NRI 12/2010 = 3.39
  5. Annual EPS before NRI 12/2011 = 2.21

Dividend history

  1. Dividend Yield = 7.65
  2. Dividend Yield 5 Year Average 12/2011 = 6.11
  3. Dividend Yield 5 Year Average 09/2011 = 6.11
  4. Annual Dividend 12/2011 = 2.9
  5. Annual Dividend 12/2010 = 2.9
  6. Forward Yield = 7.65
  7. Dividend 5 year Growth 12/2011 = 72.26

Dividend sustainability

  1. Payout Ratio 06/2011 = 1.27
  2. Payout Ratio 5 Year Average 12/2011 = 0.68
  3. Payout Ratio 5 Year Average 09/2011 = 0.68
  4. Payout Ratio 5 Year Average 06/2011 = 0.65
  5. Change in Payout Ratio = 0.59

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -7.89
  2. Next 3-5 Year Estimate EPS Growth rate = 4.09
  3. EPS Growth Quarterly(1)/Q(-3) = 127.63
  4. ROE 5 Year Average 12/2011 = 10.29
  5. ROE 5 Year Average 09/2011 = 10.29
  6. ROE 5 Year Average 06/2011 = 10.25
  7. Return on Investment 06/2011 = 3.26
  8. Debt/Total Cap 5 Year Average 12/2011 = 46.13
  9. Debt/Total Cap 5 Year Average 09/2011 = 46.13
  10. Debt/Total Cap 5 Year Average 06/2011 = 46.23
  1. Current Ratio 06/2011 = 0.88
  2. Current Ratio 5 Year Average = 0.76
  3. Quick Ratio = 0.88
  4. Cash Ratio = 0.38
  5. Interest Coverage Quarterly = 1.62

Valuation

  1. Book Value Quarterly = 33.72
  2. Price/ Book = 1.13
  3. Price/ Cash Flow = 4.5
  4. Price/ Sales = 1.53
  5. EV/EBITDA 12 Mo = 7.4

Company: Frontier Communication (FTR)

Levered Free Cash Flow = $701M

Basic Key ratios

  1. Percentage Held by Insiders = 0.62
  2. Relative Strength 52 weeks = 19
  3. Dividend 5-year Growth = -10.83
  4. Cash Flow 5 -year Average = 1.93
  5. Dividend Yield 5-Year Average = 10.81

Growth

  1. Net Income ($mil) 12/2011 = 150
  2. Net Income ($mil) 12/2010 = 153
  3. Net Income ($mil) 12/2009 = 121
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = -2
  5. Quarterly Net Income this Quarterly/same Quarter year ago = -8.14
  1. EBITDA ($mil) 12/2011 = 2314
  2. EBITDA ($mil) 12/2010 = 1686
  3. EBITDA ($mil) 12/2009 = 1048
  4. Net Income Reported Quarterlytr ($mil) = 42
  5. Annual Net Income this Yr/ Net Income last Yr = -2
  6. Cash Flow ($/share) 12/2011 = 1.65
  7. Cash Flow ($/share) 12/2010 = 1.14
  8. Cash Flow ($/share) 12/2009 = 2.08
  1. Sales ($mil) 12/2011 = 5243
  2. Sales ($mil) 12/2010 = 3798
  3. Sales ($mil) 12/2009 = 2118
  1. Annual EPS before NRI 12/2007 = 0.67
  2. Annual EPS before NRI 12/2008 = 0.58
  3. Annual EPS before NRI 12/2009 = 0.55
  4. Annual EPS before NRI 12/2010 = 0.37
  5. Annual EPS before NRI 12/2011 = 0.24

Dividend history

  1. Dividend Yield = 9.73
  2. Dividend Yield 5 Year Average 12/2011 = 10.81
  3. Dividend Yield 5 Year Average 09/2011 = 10.81
  4. Annual Dividend 12/2011 = 0.75
  5. Annual Dividend 12/2010 = 0.88
  6. Forward Yield = 9.73
  7. Dividend 5 year Growth 12/2011 = -10.83

Dividend sustainability

  1. Payout Ratio 06/2011 = 3.13
  2. Payout Ratio 5 Year Average 12/2011 = 1.89
  3. Payout Ratio 5 Year Average 09/2011 = 1.89
  4. Payout Ratio 5 Year Average 06/2011 = 1.86
  5. Change in Payout Ratio = 1.23

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -50.24
  2. EPS Growth Quarterly(1)/Q(-3) = -116.67
  3. ROE 5 Year Average 12/2011 = 22.7
  4. ROE 5 Year Average 09/2011 = 22.7
  5. ROE 5 Year Average 06/2011 = 22.71
  6. Return on Investment 06/2011 = 1.87
  7. Debt/Total Cap 5 Year Average 12/2011 = 79.84
  8. Debt/Total Cap 5 Year Average 09/2011 = 79.84
  9. Debt/Total Cap 5 Year Average 06/2011 = 79.77
  10. Current Ratio 06/2011 = 1.07
  11. Current Ratio 5 Year Average = 1.33
  12. Quick Ratio = 1.07
  13. Cash Ratio = 0.55
  14. Interest Coverage Quarterly = 1.4

Valuation

  1. Book Value Quarterly = 4.49
  2. Price/ Book = 0.92
  3. Price/ Cash Flow = 2.49
  4. Price/ Sales = 0.78
  5. EV/EBITDA 12 Mo = 5.18

Company: Verizon Communications (VZ)

Levered Free Cash Flow = 11.76B

Basic Key ratios

  1. Percentage Held by Insiders = 0.02
  2. Relative Strength 52 weeks = 60
  3. Dividend 5-year Growth = 4.34
  4. Cash Flow 5 -year Average = 7.74
  5. Dividend Yield 5-Year Average = 5.39

Growth

  1. Net Income ($mil) 12/2011 = 2404
  2. Net Income ($mil) 12/2010 = 2549
  3. Net Income ($mil) 12/2009 = 4894
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = -35.57
  5. Quarterly Net Income this Quarterly/same Quarter year ago = -176.66
  1. EBITDA ($mil) 12/2011 = 29806
  2. EBITDA ($mil) 12/2010 = 31612
  3. EBITDA ($mil) 12/2009 = 33156
  4. Net Income Reported Quarterlytr ($mil) = -2023
  5. Annual Net Income this Yr/ Net Income last Yr = -5.69
  6. Cash Flow ($/share) 12/2011 = 7.98
  7. Cash Flow ($/share) 12/2010 = 7.64
  8. Cash Flow ($/share) 12/2009 = 8.22
  1. Sales ($mil) 12/2011 = 110875
  2. Sales ($mil) 12/2010 = 106565
  3. Sales ($mil) 12/2009 = 107808
  1. Annual EPS before NRI 12/2007 = 2.36
  2. Annual EPS before NRI 12/2008 = 2.54
  3. Annual EPS before NRI 12/2009 = 2.4
  4. Annual EPS before NRI 12/2010 = 1.83
  5. Annual EPS before NRI 12/2011 = 2.15

Dividend history

  1. Dividend Yield = 5.44
  2. Dividend Yield 5 Year Average 12/2011 = 5.39
  3. Dividend Yield 5 Year Average 09/2011 = 5.39
  4. Annual Dividend 12/2011 = 1.96
  5. Annual Dividend 12/2010 = 1.91
  6. Forward Yield = 5.44
  7. Dividend 5 year Growth 12/2011 = 4.34

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.93
  2. Payout Ratio 5 Year Average 12/2011 = 0.78
  3. Payout Ratio 5 Year Average 09/2011 = 0.78
  4. Payout Ratio 5 Year Average 06/2011 = 0.77
  5. Change in Payout Ratio = 0.15

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -5.43
  2. Next 3-5 Year Estimate EPS Growth rate = 6.18
  3. EPS Growth Quarterly(1)/Q(-3) = -101.96
  4. ROE 5 Year Average 12/2011 = 10.21
  5. ROE 5 Year Average 09/2011 = 10.21
  6. ROE 5 Year Average 06/2011 = 10.47
  7. Return on Investment 06/2011 = 4.45
  8. Debt/Total Cap 5 Year Average 12/2011 = 43.41
  9. Debt/Total Cap 5 Year Average 09/2011 = 43.41
  10. Debt/Total Cap 5 Year Average 06/2011 = 43.94
  1. Current Ratio 06/2011 = 1.01
  2. Current Ratio 5 Year Average = 0.78
  3. Quick Ratio = 0.98
  4. Cash Ratio = 0.59
  5. Interest Coverage Quarterly = N/A

Valuation

  1. Book Value Quarterly = 30.34
  2. Price/ Book = 1.21
  3. Price/ Cash Flow = 4.61
  4. Price/ Sales = 0.94
  5. EV/EBITDA 12 Mo = 4.72

Company: Windstream Corp (WIN)

Levered Free Cash Flow = $245M

Basic Key ratios

  1. Percentage Held by Insiders = 0.78
  2. Relative Strength 52 weeks = 50
  3. Dividend 5-year Growth = 0
  4. Cash Flow 5 -ear Average = 2.1
  5. Dividend Yield 5-Year Average = 8.96

Growth

  1. Net Income ($mil) 12/2011 = 172
  2. Net Income ($mil) 12/2010 = 313
  3. Net Income ($mil) 12/2009 = 399
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = -49.69
  5. Quarterly Net Income this Quarterly/same Quarter year ago = -144.06
  1. EBITDA ($mil) 12/2011 = 1728
  2. EBITDA ($mil) 12/2010 = 1724
  3. EBITDA ($mil) 12/2009 = 1598
  4. Net Income Reported Quarterlytr ($mil) = -32
  5. Annual Net Income this Yr/ Net Income last Yr = -44.9
  6. Cash Flow ($/share) 12/2011 = 2.23
  7. Cash Flow ($/share) 12/2010 = 2.19
  8. Cash Flow ($/share) 12/2009 = 2.24
  1. Sales ($mil) 12/2011 = 4286
  2. Sales ($mil) 12/2010 = 3712
  3. Sales ($mil) 12/2009 = 2997
  1. Annual EPS before NRI 12/2007 = 0.99
  2. Annual EPS before NRI 12/2008 = 1.02
  3. Annual EPS before NRI 12/2009 = 0.95
  4. Annual EPS before NRI 12/2010 = 0.77
  5. Annual EPS before NRI 12/2011 = 0.78

Dividend history

  1. Dividend Yield = 8.93
  2. Dividend Yield 5 Year Average 12/2011 = 8.96
  3. Dividend Yield 5 Year Average 09/2011 = 8.96
  4. Annual Dividend 12/2011 = 1
  5. Annual Dividend 12/2010 = 1
  6. Forward Yield = 8.93
  7. Dividend 5 year Growth 12/2011 = 0
  1. Dividend sustainability
  2. Payout Ratio 06/2011 = 1.33
  3. Payout Ratio 5 Year Average 12/2011 = 1.11
  4. Payout Ratio 5 Year Average 09/2011 = 1.11
  5. Payout Ratio 5 Year Average 06/2011 = 1.11
  6. Change in Payout Ratio = 0.23

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -13.29
  2. Next 3-5 Year Estimate EPS Growth rate = 2
  3. EPS Growth Quarterly(1)/Q(-3) = -105.56
  4. ROE 5 Year Average 12/2011 = 96.38
  5. ROE 5 Year Average 09/2011 = 96.38
  6. ROE 5 Year Average 06/2011 = 95.7
  7. Return on Investment 06/2011 = 4.5
  8. Debt/Total Cap 5 Year Average 12/2011 = 91.93
  9. Debt/Total Cap 5 Year Average 09/2011 = 91.93
  10. Debt/Total Cap 5 Year Average 06/2011 = 91.94
  1. Current Ratio 06/2011 = 1.04
  2. Current Ratio 5 Year Average = 1.01
  3. Quick Ratio = 0.99
  4. Cash Ratio = 0.45
  5. Interest Coverage Quarterly = 0.83

Valuation

  1. Book Value Quarterly = 2.57
  2. Price/ Book = 4.36
  3. Price/ Cash Flow = 5.03
  4. Price/ Sales = 1.53
  5. EV/EBITDA 12 Mo = 8.83

Conclusion

Even though the correction of the past few days appears to be strong, the markets are still overbought and need to let out some steam. Prudent investors would do well to wait for a strong pullback before committing funds to this market. A pullback in the 7-12% ranges would qualify as a strong pullback.

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies-let the buyer beware.

Source: 5 Interesting Communications Plays: China Mobile Our Top Choice

Additional disclosure: EPS, Price, EPS surprise charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Earnings estimates and growth rate charts sourced from dailyfinance.com. Consensus estimate analysis table sourced from reuters.com.