Reviewing United States Cellular (USM) and Gogo (GOGO)

United States Cellular (NYSE: USM) and Gogo (NASDAQ:GOGO) are both computer and technology companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Earnings and Valuation

This table compares United States Cellular and Gogo’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
United States Cellular $3.94 billion 0.80 $48.00 million ($3.13) -11.82
Gogo $596.55 million 1.51 -$124.50 million ($1.99) -5.20

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

Insider and Institutional Ownership

14.8% of United States Cellular shares are owned by institutional investors. Comparatively, 69.8% of Gogo shares are owned by institutional investors. 1.6% of United States Cellular shares are owned by company insiders. Comparatively, 37.3% of Gogo shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations for United States Cellular and Gogo, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
United States Cellular 1 1 0 0 1.50
Gogo 1 1 3 0 2.40

United States Cellular currently has a consensus target price of $30.00, suggesting a potential downside of 18.94%. Gogo has a consensus target price of $14.19, suggesting a potential upside of 37.08%. Given Gogo’s stronger consensus rating and higher probable upside, analysts clearly believe Gogo is more favorable than United States Cellular.

Profitability

This table compares United States Cellular and Gogo’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
United States Cellular -6.93% 0.94% 0.49%
Gogo -23.51% N/A -12.24%

Volatility and Risk

United States Cellular has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500. Comparatively, Gogo has a beta of 1.69, indicating that its stock price is 69% more volatile than the S&P 500.

Summary

Gogo beats United States Cellular on 9 of the 14 factors compared between the two stocks.

About United States Cellular

United States Cellular Corporation (U.S. Cellular) is a provider of wireless telecommunication services. The Company’s wireless operating markets are in the United States. U.S. Cellular provides service to postpaid and prepaid customers from a range of demographic segments. The Company focuses on retail consumers, government and small-to-mid-size business customers in industries, such as construction, retail, professional services and real estate. The Company offers a range of wireless devices, such as handsets, modems, mobile hotspots, home phones and tablets for use by its customers. U.S. Cellular offers wireless devices that are compatible with fourth generation long term evolution (4G LTE) and third generation (3G) networks. U.S. Cellular offers a range of accessories, such as carrying cases, hands-free devices, batteries, battery chargers, and memory cards to related consumer electronics, such as headphones, speakers and Bluetooth keyboards.

About Gogo

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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