Telephone and Data Systems (NYSE:TDS – Get Free Report) and Swisscom (OTCMKTS:SCMWY – Get Free Report) are both communication services companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Telephone and Data Systems and Swisscom, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Telephone and Data Systems | 0 | 3 | 2 | 0 | 2.40 |
| Swisscom | 3 | 5 | 0 | 0 | 1.62 |
Telephone and Data Systems presently has a consensus target price of $47.50, suggesting a potential upside of 44.25%. Given Telephone and Data Systems’ stronger consensus rating and higher probable upside, analysts clearly believe Telephone and Data Systems is more favorable than Swisscom.
Volatility and Risk
Telephone and Data Systems has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500. Comparatively, Swisscom has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.
Valuation & Earnings
This table compares Telephone and Data Systems and Swisscom”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Telephone and Data Systems | $1.23 billion | 3.09 | -$6.24 million | $3.00 | 10.98 |
| Swisscom | $18.16 billion | 25.00 | $1.53 billion | $3.13 | 27.99 |
Swisscom has higher revenue and earnings than Telephone and Data Systems. Telephone and Data Systems is trading at a lower price-to-earnings ratio than Swisscom, indicating that it is currently the more affordable of the two stocks.
Dividends
Telephone and Data Systems pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Swisscom pays an annual dividend of $2.03 per share and has a dividend yield of 2.3%. Telephone and Data Systems pays out 5.3% of its earnings in the form of a dividend. Swisscom pays out 64.9% 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.
Profitability
This table compares Telephone and Data Systems and Swisscom’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Telephone and Data Systems | 33.20% | 11.97% | 6.04% |
| Swisscom | 8.73% | 11.18% | 3.65% |
Insider & Institutional Ownership
80.0% of Telephone and Data Systems shares are held by institutional investors. 14.2% of Telephone and Data Systems shares are held by company insiders. Comparatively, 1.0% of Swisscom shares are held by company 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 Swisscom on 10 of the 16 factors compared between the two stocks.
About Telephone and Data Systems
Telephone and Data Systems, Inc., a telecommunications company, provides communications services in the United States. It operates through two segments: UScellular and TDS Telecom. The company offers wireless solutions to consumers, and business and government customers, including a suite of connected Internet of things (IoT) solutions, and software applications for monitor and control, business automation/operations, communication, fleet and asset management, smart water solutions, private cellular networks and custom, and end-to-end IoT solutions; wireless priority services and quality priority and preemption options; smartphones and other handsets, tablets, wearables, mobile hotspots, fixed wireless home internet, and IoT devices; and accessories, such as cases, screen protectors, chargers, and memory cards, as well as consumer electronics, including audio, home automation and networking products. It also provides replace and repair services; Trade-In program through which it buys customers' used equipment; internet connections and all-home Wi-Fi services; TDS TV+, an integrated cloud television platform that offers video content and features; local and long-distance telephone service, voice over internet protocol, and enhanced services; broadband, IP-based services, and hosted voice and video collaboration services; and communication services in underserved areas. The company sells its products through retail stores, direct and indirect sales, third-party retailers, and independent agents, as well as through ecommerce and telesales. Telephone and Data Systems, Inc. was incorporated in 1968 and is headquartered in Chicago, Illinois.
About Swisscom
Swisscom AG provides telecommunication services primarily in Switzerland, Italy, and internationally. It operates through three segments: Swisscom Switzerland, Fastweb, and Other Operating. The company offers mobile and fixed-network services, such as telephony, TV, broadband, and mobile offerings, as well as sells terminal equipment; and telecom and communications solutions for large corporations and small and medium-sized enterprises. It also provides cloud, outsourcing, workplace, mobile phone, networking, business process optimization, SAP, and security and authentication solutions, as well as a range of services to the banking industry; Internet of Things solutions; digitization services to the healthcare sector; IT systems for health insurance companies; fixed-line and mobile networks by other telecommunication service providers; and roaming to foreign operators whose customers use its mobile networks, as well as broadband services and regulated products. In addition, the company plans, operates, and maintains network infrastructure and IT systems; provides support functions to finance, human resource, and strategy, as well as management of real estate and vehicle fleet; and offers broadband and mobile services, such as telephony, mobile offerings, and broadband services, as well as ICT solutions for residential, business, and wholesale customers. Further, it provides IT and network services; online and telephone directories; and cross-platform retail media and security communication services, as well as builds and maintains wired and wireless networks. The company was founded in 1998 and is based in Bern, Switzerland.
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