Contrasting Rogers Communication (RCI) and Telephone and Data Systems (TDS)

Rogers Communication (NYSE: RCI) and Telephone and Data Systems (NYSE:TDS) are both mid-cap consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.

Dividends

Rogers Communication pays an annual dividend of $1.54 per share and has a dividend yield of 2.9%. Telephone and Data Systems pays an annual dividend of $0.62 per share and has a dividend yield of 2.1%. Rogers Communication pays out 104.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telephone and Data Systems pays out 129.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telephone and Data Systems has raised its dividend for 42 consecutive years. Rogers Communication is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

47.4% of Rogers Communication shares are held by institutional investors. Comparatively, 82.5% of Telephone and Data Systems shares are held by institutional investors. 17.3% of Telephone and Data Systems shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Rogers Communication has a beta of 0.86, indicating that its share price is 14% less volatile than the S&P 500. Comparatively, Telephone and Data Systems has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.

Earnings and Valuation

This table compares Rogers Communication and Telephone and Data Systems’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Rogers Communication $11.46 billion 1.85 $4.23 billion $1.48 35.57
Telephone and Data Systems $5.04 billion 0.63 $934.00 million $0.48 60.08

Rogers Communication has higher revenue and earnings than Telephone and Data Systems. Rogers Communication 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.

Profitability

This table compares Rogers Communication and Telephone and Data Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Rogers Communication 7.42% 28.90% 5.64%
Telephone and Data Systems 1.09% 1.15% 0.58%

Analyst Recommendations

This is a summary of current recommendations and price targets for Rogers Communication and Telephone and Data Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Rogers Communication 0 5 3 0 2.38
Telephone and Data Systems 0 2 0 0 2.00

Rogers Communication currently has a consensus price target of $57.00, indicating a potential upside of 8.26%. Given Rogers Communication’s stronger consensus rating and higher probable upside, equities analysts clearly believe Rogers Communication is more favorable than Telephone and Data Systems.

Summary

Rogers Communication beats Telephone and Data Systems on 12 of the 17 factors compared between the two stocks.

About Rogers Communication

Rogers Communications Inc. is a communications and media company. The Company provides wireless communications services, and cable television, Internet, information technology (IT) and telephony services to consumers and businesses. Its segments include Wireless, Cable, Business Solutions and Media. The Wireless segment is engaged in wireless telecommunications operations for Canadian consumers and businesses. The Cable segment include cable telecommunications operations, including Internet, television and telephony (phone) services for Canadian consumers and businesses. The Business Solutions segment is engaged in network connectivity through its fiber network and data center assets to support a range of voice, data, networking, hosting, and cloud-based services for the enterprise, public sector and carrier wholesale markets. The Media segment has a portfolio of media properties, including sports media and entertainment, multi-platform shopping, digital media and publishing.

About Telephone and Data Systems

Telephone and Data Systems, Inc. is a diversified telecommunications company. The Company is engaged in conducting its Wireless operations through its subsidiary, United States Cellular Corporation (U.S. Cellular), as well as providing its wireline services, cable services, and hosted and managed services (HMS), through its subsidiary, TDS Telecommunications Corporation (TDS Telecom). It operates through four business segments: U.S. Cellular, Wireline, Cable, and Hosted and Managed Services. U.S. Cellular provides service to postpaid and prepaid customers. Wireline operations provide retail telecommunications services to both residential and commercial customers. Wireline offers services, including broadband, video, voice and network access services. Cable offers broadband, video and voice services under TDS and BendBroadband brand names. It provides a range of information technology (IT) services, including colocation, and cloud and hosting solutions through its HMS business.

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