Financial Comparison: Telephone & Data Systems (TDS) & BT Group (BT)

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

Analyst Ratings

This is a summary of current recommendations for Telephone & Data Systems and BT Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telephone & Data Systems 1 0 3 0 2.50
BT Group 1 10 5 0 2.25

Telephone & Data Systems presently has a consensus price target of $36.50, indicating a potential upside of 22.98%. BT Group has a consensus price target of $302.22, indicating a potential upside of 2,003.15%. Given BT Group’s higher possible upside, analysts plainly believe BT Group is more favorable than Telephone & Data Systems.

Risk and Volatility

Telephone & Data Systems has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, BT Group has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Telephone & Data Systems 3.53% 1.98% 1.05%
BT Group 8.64% 32.72% 6.43%

Valuation & Earnings

This table compares Telephone & Data Systems and BT Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telephone & Data Systems $5.04 billion 0.66 $153.00 million $0.53 56.00
BT Group $31.46 billion 0.91 $2.70 billion $1.85 7.77

BT Group has higher revenue and earnings than Telephone & Data Systems. BT Group 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.

Dividends

Telephone & Data Systems pays an annual dividend of $0.64 per share and has a dividend yield of 2.2%. BT Group pays an annual dividend of $1.38 per share and has a dividend yield of 9.6%. Telephone & Data Systems pays out 120.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BT Group pays out 74.6% of its earnings in the form of a dividend. Telephone & Data Systems has increased its dividend for 43 consecutive years and BT Group has increased its dividend for 6 consecutive years. BT Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

81.3% of Telephone & Data Systems shares are held by institutional investors. Comparatively, 0.8% of BT Group shares are held by institutional investors. 17.3% of Telephone & Data Systems shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

BT Group beats Telephone & Data Systems on 12 of the 17 factors compared between the two stocks.

Telephone & Data Systems Company Profile

Telephone and Data Systems, Inc., a telecommunications company, provides wireless, wireline, cable, and hosted and managed services in the United States. The company offers cellular services, such as postpaid national plans and prepaid service plans with voice, messaging, and data usage options; and business rate plans. It also offers wireless devices comprising handsets, tablets, mobile hotspots, home phones, and routers; and including accessories, including wireless basics, such as cases, screen protectors, chargers, and memory cards, as well as an assortment of consumer electronics comprising headphones, speakers, wearables, and home automation products. In addition, the company provides wireline and cable broadband services; digital television (TV) and digital satellite TV video services; voice services comprising local and long-distance telephone, voice over Internet protocol, find me follow me, collaboration, instant messaging, and other services; and network access services. Further, it offers a range of information technology (IT) services, including colocation, cloud and hosting solutions, managed services, and enterprise resource planning application management services; sells IT hardware, as well as provides related maintenance and professional services; and engages in planning, engineering, procurement, sale, installation, and management of IT-infrastructure solutions. Additionally, the company operates retail stores and kiosks. The company serves approximately 5.1 million wireless customers and 1.2 million wireline and cable customers. Telephone and Data Systems, Inc. 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.

BT Group Company Profile

BT Group plc provides communications services worldwide. Its Consumer segment sells telephones, baby monitors, and Wi-Fi extenders through high street retailers, online BT Shop, and Website BT.com; and offers home phone, copper and fiber broadband, TV, and mobile services in various packages. The company's EE segment offers 2G, 3G, and 4G mobile network services; broadband, fixed-voice, and TV services; and postpaid and prepaid plans, and emergency services network. This segment also sells 4G mobile phones, tablets, connected devices, and mobile broadband devices from various manufacturers. Its Business and Public Sector segment provides fixed voice, mobility, fiber and connectivity, and networked IT services to retailers, utilities, public sector, healthcare, sports, construction, finance, and educational sectors. The company's Global Services segment offers business communications and ICT services comprising BT Connect, BT Security, BT One, BT Contact, BT Compute, BT Advise, and BT for financial markets. This segment serves approximately 5,500 customers in 180 countries. Its Wholesale and Ventures segment enables communications providers and other organizations to provide fixed or mobile phone services. Its ventures provide mass-market services, such as directory enquiries and payphones; and enterprise services comprising BT Fleet and BT Redcare. This segment also provides broadband and Ethernet, voice, hosted communication, mobile virtual network operator, managed solutions, machine-to-machine, roaming, and media services. The company's Openreach segment engages in the provision of services over the local access network; and installation and maintenance of fiber and copper communications networks that connect homes and businesses. The company was formerly known as Newgate Telecommunications Limited and changed its name to BT Group plc in September 2001. BT Group plc was incorporated in 2001 and is headquartered in London, the United Kingdom.

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