Critical Survey: TIM (NYSE:TIMB) versus Freenet (OTCMKTS:FRTAF)

Freenet (OTCMKTS:FRTAF) and TIM (NYSE:TIMB) are both mid-cap communication services companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, valuation, risk and profitability.

Earnings & Valuation

This table compares Freenet and TIM”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freenet	$2.76 billion	1.16	$306.95 million	$2.56	10.55
TIM	$4.77 billion	1.79	$772.28 million	$1.69	10.44

TIM has higher revenue and earnings than Freenet. TIM is trading at a lower price-to-earnings ratio than Freenet, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Freenet and TIM, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freenet	0	2	1	1	2.75
TIM	1	9	2	1	2.23

TIM has a consensus target price of $24.82, indicating a potential upside of 40.60%. Given TIM’s higher probable upside, analysts clearly believe TIM is more favorable than Freenet.

Profitability

This table compares Freenet and TIM’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freenet	10.04%	17.88%	7.85%
TIM	15.73%	17.99%	7.74%

Risk and Volatility

Freenet has a beta of -0.01, meaning that its share price is 101% less volatile than the S&P 500. Comparatively, TIM has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500.

Summary

TIM beats Freenet on 8 of the 12 factors compared between the two stocks.

About Freenet

freenet AG provides telecommunications, broadcasting, and multimedia services for mobile communications/mobile internet, and digital lifestyle sectors in Germany. It operates through Mobile Communications, TV and Media, and Other/Holding segments. The Mobile Communications segment engages in the marketing of mobile communications services, which include voice and data services from the mobile network operators; planning, set up, installation, and maintenance services for WiFi networks; and selling and distribution of mobile devices, as well as offers additional services for mobile data communications and digital lifestyle. This segment also provides network-independent services and tariffs; tariffs of the network operators on the basis of the network operator contracts; and freenet Internet, an app-based Internet product. The TV and Media segment is involved in the planning, project management, construction, operation, service, and marketing services for broadcast-related solutions for business clients in the broadcasting and media sectors; and the provision of services to end users in the field of DVB-T2 and IPTV. The Other/Holding segment offers portal services, such as e-commerce/advertising services; payment services; various digital products and entertainment formats for downloading and displaying, as well as use on mobile devices; communication development solutions, IT services, and other services; narrowband voice services; data services; and distribution services. The company provides its services under the klarmobil.de, freenetmobile.de, Dr.SIM, freenet MOBILE, FUNK, freenet FLEX, freenet, freenet TV, waipu.tv, freenet VIDEO, freenet.de, freenet BASICS, freenet ENERGY, freenet BUSINESS, CARMADA, MEDIA BROADCAST, vitrado.de, and The Cloud brands. It sells its products through electronics stores, as well as online sales. freenet AG was incorporated in 2005 and is headquartered in Büdelsdorf, Germany.

About TIM

TIM S.A., a telecommunications company, provides mobile voice, data, and broadband services in Brazil. The company offers in mobile, landline, long-distance, and data transmission services. It also offers fixed ultra-broadband, fixed ultraband broadband, and digital content services. The company serves individuals and corporates, as well as small, medium, and large companies. TIM S.A is based in Rio de Janeiro, Brazil. The company operates as a subsidiary of TIM Brasil Serviços e Participações S.A.