Shenandoah Telecommunications (NASDAQ:SHEN) and Telephone and Data Systems (NYSE:TDS) are both mid-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, analyst recommendations, profitability, dividends, institutional ownership, earnings and valuation.
Earnings and Valuation
This table compares Shenandoah Telecommunications and Telephone and Data Systems' top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Shenandoah Telecommunications | $633.91 million | 3.78 | $54.94 million | $1.10 | 43.57 |
| Telephone and Data Systems | $5.18 billion | 0.44 | $121 million | $1.03 | 19.37 |
Telephone and Data Systems has higher revenue and earnings than Shenandoah Telecommunications. Telephone and Data Systems is trading at a lower price-to-earnings ratio than Shenandoah Telecommunications, indicating that it is currently the more affordable of the two stocks.
Dividends
Shenandoah Telecommunications pays an annual dividend of $0.34 per share and has a dividend yield of 0.7%. Telephone and Data Systems pays an annual dividend of $0.68 per share and has a dividend yield of 3.4%. Shenandoah Telecommunications pays out 30.9% of its earnings in the form of a dividend. Telephone and Data Systems pays out 66.0% 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. Telephone and Data Systems has increased its dividend for 1 consecutive years. Telephone and Data Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares Shenandoah Telecommunications and Telephone and Data Systems' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Shenandoah Telecommunications | 16.88% | 11.44% | 3.03% |
| Telephone and Data Systems | 4.32% | 4.08% | 2.00% |
Risk & Volatility
Shenandoah Telecommunications has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, Telephone and Data Systems has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.
Analyst Ratings
This is a summary of recent recommendations and price targets for Shenandoah Telecommunications and Telephone and Data Systems, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Shenandoah Telecommunications | 0 | 3 | 0 | 0 | 2.00 |
| Telephone and Data Systems | 0 | 1 | 3 | 1 | 3.00 |
Shenandoah Telecommunications presently has a consensus price target of $49.50, indicating a potential upside of 3.28%. Telephone and Data Systems has a consensus price target of $29.10, indicating a potential upside of 45.86%. Given Telephone and Data Systems' stronger consensus rating and higher possible upside, analysts clearly believe Telephone and Data Systems is more favorable than Shenandoah Telecommunications.
Insider and Institutional Ownership
53.4% of Shenandoah Telecommunications shares are held by institutional investors. Comparatively, 42.0% of Telephone and Data Systems shares are held by institutional investors. 4.3% of Shenandoah Telecommunications shares are held by company insiders. Comparatively, 14.5% of Telephone and Data Systems shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Summary
Telephone and Data Systems beats Shenandoah Telecommunications on 10 of the 18 factors compared between the two stocks.
