Telephone and Data Systems (TDS) vs. America Movil (AMX) Critical Contrast

Telephone and Data Systems (NYSE: TDS) and America Movil (NYSE:AMX) are both mid-cap utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, valuation, earnings, profitability, analyst recommendations, dividends and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
Telephone and Data Systems -2.77% 1.08% 0.55%
America Movil 4.49% 18.47% 3.26%

Dividends

Telephone and Data Systems pays an annual dividend of $0.62 per share and has a dividend yield of 2.3%. America Movil pays an annual dividend of $0.17 per share and has a dividend yield of 1.0%. Telephone and Data Systems pays out -48.8% of its earnings in the form of a dividend. America Movil pays out 24.3% 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 42 consecutive years. Telephone and Data Systems is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Telephone and Data Systems and America Movil, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telephone and Data Systems 0 1 1 0 2.50
America Movil 2 0 4 0 2.33

America Movil has a consensus target price of $17.50, suggesting a potential upside of 3.43%. Given America Movil’s higher probable upside, analysts clearly believe America Movil is more favorable than Telephone and Data Systems.

Insider and Institutional Ownership

83.8% of Telephone and Data Systems shares are owned by institutional investors. Comparatively, 7.5% of America Movil shares are owned by institutional investors. 17.3% of Telephone and Data Systems shares are owned by company insiders. Comparatively, 1.0% of America Movil shares are owned 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

Telephone and Data Systems has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500. Comparatively, America Movil has a beta of 0.52, indicating that its share price is 48% less volatile than the S&P 500.

Earnings & Valuation

This table compares Telephone and Data Systems and America Movil’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telephone and Data Systems $5.10 billion 0.58 $43.00 million ($1.27) -21.04
America Movil $52.35 billion 1.07 $417.00 million $0.70 24.17

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

Summary

America Movil beats Telephone and Data Systems on 9 of the 17 factors compared between the two stocks.

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.

About America Movil

America Movil, S.A.B. de C.V. is a holding company. The Company provides telecommunications services. Its services include mobile and fixed-line voice services, wireless and fixed data services, Internet access and pay television, sales of equipment, accessories and computers, as well as other related services. Its segments are Mexico Wireless, Mexico Fixed, Brazil, Colombia, Southern Cone, Andean Region, Central America, the Caribbean, the United States and Europe. The Southern Cone segment includes Argentina, Chile, Paraguay and Uruguay. The Andean Region segment includes Ecuador and Peru. The Central America segment includes Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama. The Caribbean segment includes the Dominican Republic and Puerto Rico. The Europe segment includes Austria, Belarus, Bulgaria, Croatia, Macedonia, Serbia and Slovenia. It operates in all of its geographic segments under the Claro brand, except in Mexico, the United States and Europe.

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