Analyzing Telephone & Data Systems (NYSE:TDS) and Windstream (NYSE:WINMQ)

Telephone & Data Systems (NYSE:TDS) and Windstream (OTCMKTS:WINMQ) are both utilities companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, earnings, risk, profitability, institutional ownership, dividends and valuation.

Volatility and Risk

Telephone & Data Systems has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500. Comparatively, Windstream has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Dividends

Telephone & Data Systems pays an annual dividend of $0.66 per share and has a dividend yield of 2.1%. Windstream does not pay a dividend. Telephone & Data Systems pays out 56.4% of its earnings in the form of a dividend. Telephone & Data Systems has raised its dividend for 44 consecutive years.

Valuation & Earnings

This table compares Telephone & Data Systems and Windstream’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telephone & Data Systems $5.11 billion 0.71 $135.00 million $1.17 27.17
Windstream $5.71 billion 0.00 -$723.00 million ($21.40) -0.01

Telephone & Data Systems has higher earnings, but lower revenue than Windstream. Windstream is trading at a lower price-to-earnings ratio than Telephone & Data Systems, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

80.9% of Telephone & Data Systems shares are held by institutional investors. Comparatively, 1.1% of Windstream shares are held by institutional investors. 14.3% of Telephone & Data Systems shares are held by insiders. Comparatively, 1.2% of Windstream shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Telephone & Data Systems and Windstream’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Telephone & Data Systems 3.00% 2.92% 1.55%
Windstream -52.19% N/A -6.78%

Analyst Ratings

This is a summary of current recommendations and price targets for Telephone & Data Systems and Windstream, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telephone & Data Systems 0 0 4 0 3.00
Windstream 0 0 0 0 N/A

Telephone & Data Systems currently has a consensus target price of $41.13, indicating a potential upside of 29.36%. Given Telephone & Data Systems’ higher possible upside, equities research analysts plainly believe Telephone & Data Systems is more favorable than Windstream.

Summary

Telephone & Data Systems beats Windstream on 14 of the 16 factors compared between the two stocks.

Telephone & Data Systems Company Profile

Telephone and Data Systems, Inc., a telecommunications company, provides wireless, cable and wireline broadband, TV, voice, and hosted and managed services in the United States. It operates through three segments: U.S. Cellular, Wireline, and Cable. The company offers cellular services to postpaid and prepaid customers, including retail consumers, government entities, and small-to-mid-size business customers in industries, such as the construction, retail, agriculture, professional services, and real estate; and national plans with voice, messaging, and data usage options. It also provides wireless devices comprising handsets, tablets, mobile hotspots, home phones, and routers; accessories that include wireless essentials, which comprise cases, screen protectors, chargers, and memory cards, as well as various consumer electronics, such as headphones, smart speakers, wearables, and home automation products. In addition, the company offers telecommunications services to residential and commercial customers, as well as wholesale customers and wireless carriers; broadband and digital television (TV) video services; voice services comprising local and long-distance telephone, voice over Internet protocol (VoIP), find me follow me, collaboration, instant messaging, and other services; and network access services. Further, it provides business services, including data networking, Ethernet, broadband access, and VoIP services to small- and medium-sized businesses, as well as operates retail stores and kiosks. The company offers its services to approximately 6 million connections. It sells its products through retail sales, direct sales, third-party retailers, and independent agents, as well as through Website and telesales. The company was founded in 1968 and is headquartered in Chicago, Illinois.

Windstream Company Profile

Windstream Holdings, Inc. provides network communications and technology solutions in the United States. Its Consumer & Small Business segment offers services, including traditional local and long-distance voice services, and high-speed Internet services; and value-added services, such as security and online back-up. It also offers consumer video services; premium broadband and video entertainment services under the Kinetic brand; voice and Web conferencing products; and advanced hosted-voice, network management, and business continuity services, as well as owns and operates cable television franchises. This segment serves approximately 1.4 million residential and small business customers. The company's Enterprise segment offers integrated voice and data services, which deliver voice and broadband services over a single Internet connection, data transport services, and multi-site networking services; and other data services comprising cloud computing, and collocation and managed services as an alternative to traditional information technology infrastructure. Its Wholesale segment provides network bandwidth to other telecommunications carriers, network operators, and content providers; fiber-to-the-tower connections to support the wireless backhaul market; voice and data carrier services to other communications providers and large scale purchasers; and special access services and time division multiplexing private line transport. The company's Consumer CLEC segment offers traditional voice and long-distance services, nationwide Internet access services, and dial-up and high-speed, as well as online backup and various email services. Windstream Holdings, Inc. also leases and sells broadband modems and home networking gateways; and sells computers and phones. The company was incorporated in 2013 and is based in Little Rock, Arkansas. On February 25, 2019, Windstream Holdings, Inc. along with its 202 affiliates, filed a voluntary petition for reorganization under Chapter 11 in the US Bankruptcy Court for the Southern District of New York.

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