Telecom Argentina (NYSE:TEO) and Telephone and Data Systems (NYSE:TDS) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.
Analyst Recommendations
This is a breakdown of current ratings and target prices for Telecom Argentina and Telephone and Data Systems, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Telecom Argentina | 1 | 1 | 0 | 0 | 1.50 |
| Telephone and Data Systems | 0 | 1 | 3 | 1 | 3.00 |
Telecom Argentina currently has a consensus target price of $7.00, indicating a potential upside of 17.45%. Telephone and Data Systems has a consensus target price of $29.10, indicating a potential upside of 62.66%. Given Telephone and Data Systems' stronger consensus rating and higher possible upside, analysts plainly believe Telephone and Data Systems is more favorable than Telecom Argentina.
Profitability
This table compares Telecom Argentina and Telephone and Data Systems' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Telecom Argentina | 3.84% | 2.72% | 1.46% |
| Telephone and Data Systems | 4.32% | 4.08% | 2.00% |
Dividends
Telecom Argentina pays an annual dividend of $0.35 per share and has a dividend yield of 5.9%. Telephone and Data Systems pays an annual dividend of $0.68 per share and has a dividend yield of 3.8%. Telecom Argentina pays out -205.9% 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 raised its dividend for 1 consecutive years. Telecom Argentina is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings & Valuation
This table compares Telecom Argentina and Telephone and Data Systems' top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Telecom Argentina | $4.00 billion | 0.64 | $-91,000,000.00 | ($0.17) | -35.06 |
| Telephone and Data Systems | $5.18 billion | 0.74 | $121 million | $1.03 | 17.37 |
Telephone and Data Systems has higher revenue and earnings than Telecom Argentina. Telecom Argentina is trading at a lower price-to-earnings ratio than Telephone and Data Systems, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Telecom Argentina has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500. Comparatively, Telephone and Data Systems has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.
Insider & Institutional Ownership
4.0% of Telecom Argentina shares are held by institutional investors. Comparatively, 42.0% of Telephone and Data Systems shares are held by institutional investors. 1.0% of Telecom Argentina shares are held by insiders. Comparatively, 14.5% of Telephone and Data Systems shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Summary
Telephone and Data Systems beats Telecom Argentina on 15 of the 18 factors compared between the two stocks.
