Vonage (NASDAQ:VG) and Telephone and Data Systems (NYSE:TDS) are both mid-cap computer and technology companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, earnings, profitability, institutional ownership, dividends and analyst recommendations.
Insider & Institutional Ownership
89.8% of Vonage shares are owned by institutional investors. Comparatively, 42.0% of Telephone and Data Systems shares are owned by institutional investors. 6.5% of Vonage shares are owned by company insiders. Comparatively, 14.5% of Telephone and Data Systems shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares Vonage and Telephone and Data Systems' gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Vonage | $1.19 billion | 2.72 | $-19,480,000.00 | $0.19 | 68.63 |
| Telephone and Data Systems | $5.18 billion | 0.75 | $121 million | $1.03 | 17.63 |
Telephone and Data Systems has higher revenue and earnings than Vonage. Telephone and Data Systems is trading at a lower price-to-earnings ratio than Vonage, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current ratings for Vonage and Telephone and Data Systems, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Vonage | 0 | 4 | 7 | 0 | 2.64 |
| Telephone and Data Systems | 0 | 1 | 3 | 1 | 3.00 |
Vonage currently has a consensus price target of $13.80, indicating a potential upside of 5.50%. Telephone and Data Systems has a consensus price target of $29.50, indicating a potential upside of 62.89%. Given Telephone and Data Systems' stronger consensus rating and higher probable upside, analysts plainly believe Telephone and Data Systems is more favorable than Vonage.
Profitability
This table compares Vonage and Telephone and Data Systems' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Vonage | -1.99% | 9.76% | 3.99% |
| Telephone and Data Systems | 4.32% | 4.08% | 2.00% |
Risk and Volatility
Vonage has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, Telephone and Data Systems has a beta of 1.17, suggesting that its share price is 17% more volatile than the S&P 500.
Summary
Telephone and Data Systems beats Vonage on 10 of the 15 factors compared between the two stocks.
