Critical Review: Telephone and Data Systems (TDS) & The Competition
Telephone and Data Systems (NYSE: TDS) is one of 36 public companies in the “Wireless Telecommunications Services” industry, but how does it contrast to its competitors? We will compare Telephone and Data Systems to similar businesses based on the strength of its valuation, institutional ownership, analyst recommendations, dividends, risk, earnings and profitability.
Telephone and Data Systems pays an annual dividend of $0.62 per share and has a dividend yield of 2.2%. Telephone and Data Systems pays out 129.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Wireless Telecommunications Services” companies pay a dividend yield of 3.0% and pay out 59.1% of their earnings in the form of a dividend. Telephone and Data Systems has raised its dividend for 42 consecutive years. Telephone and Data Systems lags its competitors as a dividend stock, given its lower dividend yield and higher payout ratio.
Risk & Volatility
Telephone and Data Systems has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500. Comparatively, Telephone and Data Systems’ competitors have a beta of 0.78, indicating that their average share price is 22% less volatile than the S&P 500.
This is a summary of current ratings and recommmendations for Telephone and Data Systems and its competitors, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Telephone and Data Systems||0||2||0||0||2.00|
|Telephone and Data Systems Competitors||578||1717||1807||71||2.33|
Telephone and Data Systems currently has a consensus target price of $38.00, indicating a potential upside of 36.20%. As a group, “Wireless Telecommunications Services” companies have a potential upside of 20.64%. Given Telephone and Data Systems’ higher possible upside, equities research analysts plainly believe Telephone and Data Systems is more favorable than its competitors.
Earnings and Valuation
This table compares Telephone and Data Systems and its competitors revenue, earnings per share and valuation.
|Gross Revenue||EBITDA||Price/Earnings Ratio|
|Telephone and Data Systems||$5.04 billion||$934.00 million||58.13|
|Telephone and Data Systems Competitors||$27.19 billion||$8.09 billion||7.51|
Telephone and Data Systems’ competitors have higher revenue and earnings than Telephone and Data Systems. Telephone and Data Systems is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.
Insider & Institutional Ownership
82.5% of Telephone and Data Systems shares are held by institutional investors. Comparatively, 40.3% of shares of all “Wireless Telecommunications Services” companies are held by institutional investors. 17.3% of Telephone and Data Systems shares are held by company insiders. Comparatively, 12.5% of shares of all “Wireless Telecommunications Services” companies are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This table compares Telephone and Data Systems and its competitors’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Telephone and Data Systems||1.09%||1.15%||0.58%|
|Telephone and Data Systems Competitors||-998.11%||3.28%||-6.34%|
Telephone and Data Systems competitors beat Telephone and Data Systems on 8 of the 15 factors compared.
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.
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