Comparing Telephone and Data Systems (TDS) & China Telecom Corp (CHA)
Telephone and Data Systems (NYSE: TDS) and China Telecom Corp (NYSE:CHA) are both mid-cap wireless telecommunications services – nec companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, valuation, risk, analyst recommendations and earnings.
Insider and Institutional Ownership
82.1% of Telephone and Data Systems shares are owned by institutional investors. Comparatively, 0.4% of China Telecom Corp shares are owned by institutional investors. 17.3% of Telephone and Data Systems shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Telephone and Data Systems pays an annual dividend of $0.62 per share and has a dividend yield of 2.4%. China Telecom Corp pays an annual dividend of $1.21 per share and has a dividend yield of 2.4%. Telephone and Data Systems pays out -48.8% of its earnings in the form of a dividend. China Telecom Corp pays out 34.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. China Telecom Corp has raised its dividend for 42 consecutive years. Telephone and Data Systems is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Telephone and Data Systems and China Telecom Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Telephone and Data Systems||-2.77%||1.08%||0.55%|
|China Telecom Corp||N/A||N/A||N/A|
This is a breakdown of current recommendations and price targets for Telephone and Data Systems and China Telecom Corp, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Telephone and Data Systems||0||1||1||0||2.50|
|China Telecom Corp||0||0||4||0||3.00|
Volatility and Risk
Telephone and Data Systems has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, China Telecom Corp has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500.
Earnings and Valuation
This table compares Telephone and Data Systems and China Telecom Corp’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Telephone and Data Systems||$5.10 billion||0.55||$43.00 million||($1.27)||-20.07|
|China Telecom Corp||$53.05 billion||0.77||$2.71 billion||$3.51||14.30|
China Telecom Corp has higher revenue and earnings than Telephone and Data Systems. Telephone and Data Systems is trading at a lower price-to-earnings ratio than China Telecom Corp, indicating that it is currently the more affordable of the two stocks.
China Telecom Corp beats Telephone and Data Systems on 8 of the 15 factors compared between the two stocks.
About Telephone and Data Systems
Telephone and Data Systems, Inc. is a diversified telecommunications company. The Company is engaged in conducting its Wireless operations through its subsidiary, United States Cellular Corporation (U.S. Cellular), as well as providing its wireline services, cable services, and hosted and managed services (HMS), through its subsidiary, TDS Telecommunications Corporation (TDS Telecom). It operates through four business segments: U.S. Cellular, Wireline, Cable, and Hosted and Managed Services. U.S. Cellular provides service to postpaid and prepaid customers. Wireline operations provide retail telecommunications services to both residential and commercial customers. Wireline offers services, including broadband, video, voice and network access services. Cable offers broadband, video and voice services under TDS and BendBroadband brand names. It provides a range of information technology (IT) services, including colocation, and cloud and hosting solutions through its HMS business.
About China Telecom Corp
China Telecom Corporation Limited is an investment holding company principally engaged in telecommunications and related businesses. The Company provides integrated information services, including wireline and mobile telecommunications services, Internet access services, information services and other value-added telecommunications services. The Company mainly operates its business in domestic market.
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