Telephone and Data Systems (NYSE:TDS) Issues Quarterly Earnings Results

Key Points

• Telephone and Data Systems beat earnings expectations, reporting $1.11 EPS versus the consensus estimate of a $0.87 loss. Revenue also rose 6.5% year over year, even though net margin remained negative.
• TDS Telecom is accelerating its fiber expansion, with a record 40,000 marketable fiber service addresses added in Q1 and a plan to reach 200,000–250,000 new addresses by 2026. The company kept its $550 million to $600 million capex guidance unchanged.
• Near-term pressure remains from legacy operations and customer losses, as total operating revenue and adjusted EBITDA declined and cable revenue fell about 10%. Management said it expects revenue to land in the lower half of its guidance range.

Telephone and Data Systems (NYSE:TDS - Get Free Report) issued its earnings results on Friday. The Wireless communications provider reported $1.11 earnings per share (EPS) for the quarter, beating the consensus estimate of ($0.87) by $1.98, Zacks reports. Telephone and Data Systems had a positive return on equity of 2.25% and a negative net margin of 0.21%.The company's revenue for the quarter was up 6.5% compared to the same quarter last year. During the same period in the previous year, the company posted ($0.09) earnings per share.

Here are the key takeaways from Telephone and Data Systems' conference call:

• TDS proposed to acquire the remaining public shares of Array in an all-stock merger exchanging each Array share for 0.86 TDS shares, assuming an Array dividend of $10.40 per share (~$900M) from spectrum sales; the offer is subject to a special committee review, disinterested Array shareholder approval and other customary conditions.
• TDS Telecom accelerated its fiber build and customer growth, delivering a record 40,000 marketable fiber service addresses in Q1 (1.1M total addresses now) and reaffirming a 2026 target of 200k–250k new fiber addresses with $550M–$600M capex guidance.
• Legacy copper and cable pressures are weighing on near-term results — total operating revenue fell ~3% (1% ex-divestitures), adjusted EBITDA declined 3%, cable revenues were down ~10%, and management is guiding toward the lower half of the revenue range due to these headwinds.
• Array’s tower business and spectrum monetization are progressing — cash site rental revenue rose ~64% YoY (normalized for Dish), multiple spectrum sales have closed or are expected to close in Q2/Q3, and substantial spectrum dividends have been declared/paid.
• Dish has stopped payments and is in breach of its master lease agreement, so Array ceased recognizing Dish revenue and reserved unpaid 2025 balances, although management says tenancy (excluding Dish) showed sequential improvement.

Telephone and Data Systems Trading Up 2.2%

Shares of NYSE TDS traded up $0.98 during mid-day trading on Friday, reaching $46.48. 1,345,584 shares of the company's stock were exchanged, compared to its average volume of 898,713. The firm has a market capitalization of $5.29 billion, a price-to-earnings ratio of -71.51 and a beta of 0.33. The company has a debt-to-equity ratio of 0.20, a quick ratio of 2.09 and a current ratio of 2.10. Telephone and Data Systems has a 52-week low of $32.60 and a 52-week high of $49.12. The company's 50-day moving average is $44.32 and its 200-day moving average is $42.33.

Telephone and Data Systems Announces Dividend

The firm also recently declared a quarterly dividend, which was paid on Tuesday, March 31st. Stockholders of record on Monday, March 16th were issued a dividend of $0.04 per share. The ex-dividend date was Monday, March 16th. This represents a $0.16 dividend on an annualized basis and a dividend yield of 0.3%. Telephone and Data Systems's dividend payout ratio is currently -24.62%.

Hedge Funds Weigh In On Telephone and Data Systems

Hedge funds have recently modified their holdings of the business. JPL Wealth Management LLC acquired a new position in Telephone and Data Systems during the 3rd quarter worth about $33,000. EverSource Wealth Advisors LLC lifted its position in shares of Telephone and Data Systems by 191.3% during the second quarter. EverSource Wealth Advisors LLC now owns 1,311 shares of the Wireless communications provider's stock worth $47,000 after purchasing an additional 861 shares in the last quarter. CIBC Private Wealth Group LLC acquired a new stake in shares of Telephone and Data Systems during the fourth quarter worth about $91,000. Osaic Holdings Inc. boosted its stake in shares of Telephone and Data Systems by 36.8% in the second quarter. Osaic Holdings Inc. now owns 2,965 shares of the Wireless communications provider's stock valued at $106,000 after purchasing an additional 797 shares during the period. Finally, Quadrant Capital Group LLC purchased a new position in shares of Telephone and Data Systems in the third quarter valued at approximately $136,000. 80.00% of the stock is currently owned by hedge funds and other institutional investors.

Wall Street Analyst Weigh In

Several analysts have issued reports on the company. Weiss Ratings upgraded Telephone and Data Systems from a "sell (d+)" rating to a "hold (c-)" rating in a report on Tuesday, February 24th. Wall Street Zen cut Telephone and Data Systems from a "hold" rating to a "sell" rating in a report on Sunday, March 1st. Finally, Citigroup upped their target price on Telephone and Data Systems from $51.00 to $56.00 and gave the company a "buy" rating in a report on Monday, February 23rd. Three research analysts have rated the stock with a Buy rating and two have given a Hold rating to the company. According to data from MarketBeat.com, the stock currently has a consensus rating of "Moderate Buy" and an average price target of $53.33.

About Telephone and Data Systems

Telephone and Data Systems, Inc NYSE: TDS is a diversified telecommunications company headquartered in Chicago, Illinois. Through its subsidiaries, the company provides a broad array of communications services, including wireless voice and data, wireline broadband and voice, cable television, and managed IT and cloud solutions. Its two primary operating units—TDS Telecom and U.S. Cellular—serve residential, business and wholesale customers across the United States.

TDS Telecom focuses on delivering broadband internet, digital voice, video and data communications services in primarily rural and suburban markets.

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