Analyzing Telephone & Data Systems (TDS) & Gogo (GOGO)

Telephone & Data Systems (NYSE: TDS) and Gogo (NASDAQ:GOGO) are both telecommunications services companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, profitability, earnings, dividends, valuation, risk and institutional ownership.

Risk & Volatility

Telephone & Data Systems has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, Gogo has a beta of 1.7, meaning that its share price is 70% more volatile than the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telephone & Data Systems $5.10 billion 0.60 $43.00 million ($1.27) -21.88
Gogo $596.55 million 1.61 -$124.50 million ($1.99) -5.55

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

Dividends

Telephone & Data Systems pays an annual dividend of $0.62 per share and has a dividend yield of 2.2%. Gogo does not pay a dividend. Telephone & Data Systems pays out -48.8% of its earnings in the form of a dividend. Telephone & Data Systems has increased its dividend for 42 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Telephone & Data Systems -2.77% 1.08% 0.55%
Gogo -23.51% N/A -12.24%

Analyst Recommendations

This is a breakdown of current recommendations for Telephone & Data Systems and Gogo, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telephone & Data Systems 0 1 1 0 2.50
Gogo 1 1 3 0 2.40

Gogo has a consensus target price of $14.19, indicating a potential upside of 28.39%. Given Gogo’s higher possible upside, analysts plainly believe Gogo is more favorable than Telephone & Data Systems.

Insider & Institutional Ownership

83.8% of Telephone & Data Systems shares are owned by institutional investors. Comparatively, 69.8% of Gogo shares are owned by institutional investors. 17.3% of Telephone & Data Systems shares are owned by company insiders. Comparatively, 37.3% of Gogo shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Telephone & Data Systems beats Gogo on 11 of the 17 factors compared between the two stocks.

Telephone & Data Systems Company Profile

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.

Gogo Company Profile

Gogo Inc. is a holding company. The Company is a provider of in-flight broadband connectivity and connectivity-enabled services to commercial and business aviation. The Company operates through three segments: Commercial Aviation North America (CA-NA), Commercial Aviation Rest of World (CA-ROW) and Business Aviation (BA). The CA-NA segment offers air-to-ground (ATG) and satellite connectivity and entertainment services to commercial aircraft flying routes generally within North America. The CA-ROW segment offers satellite connectivity and entertainment services, using 2Ku and Ku solutions, to commercial aircraft flying routes outside of North America. The Company’s BA segment offers a suite of integrated equipment, network and Internet connectivity products and services to the business aviation market. As of December 31, 2016, it provided services on 2,943 commercial aircraft. The Company offers a package of airborne equipment for its ATG-4/ATG and satellite services.

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