Head-To-Head Analysis: Swisscom (OTCMKTS:SCMWY) and Telephone and Data Systems (NYSE:TDS)

Telephone and Data Systems (NYSE:TDS) and Swisscom (OTCMKTS:SCMWY) are both communication services companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Earnings and Valuation

This table compares Telephone and Data Systems and Swisscom”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Telephone and Data Systems	$1.23 billion	3.09	-$6.24 million	$3.00	10.98
Swisscom	$18.16 billion	25.00	$1.53 billion	$3.13	27.99

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

Institutional & Insider Ownership

80.0% of Telephone and Data Systems shares are held by institutional investors. 14.2% of Telephone and Data Systems shares are held by insiders. Comparatively, 1.0% of Swisscom shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Telephone and Data Systems	33.20%	11.97%	6.04%
Swisscom	8.73%	11.18%	3.65%

Volatility and Risk

Telephone and Data Systems has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, Swisscom has a beta of 0.3, meaning that its share price is 70% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for Telephone and Data Systems and Swisscom, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Telephone and Data Systems	0	3	2	0	2.40
Swisscom	3	5	0	0	1.62

Telephone and Data Systems presently has a consensus price target of $47.50, indicating a potential upside of 44.25%. Given Telephone and Data Systems’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Telephone and Data Systems is more favorable than Swisscom.

Dividends

Telephone and Data Systems pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Swisscom pays an annual dividend of $2.03 per share and has a dividend yield of 2.3%. Telephone and Data Systems pays out 5.3% of its earnings in the form of a dividend. Swisscom pays out 64.9% 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.

Summary

Telephone and Data Systems beats Swisscom on 10 of the 16 factors compared between the two stocks.

About Telephone and Data Systems

Telephone and Data Systems, Inc., a telecommunications company, provides communications services in the United States. It operates through two segments: UScellular and TDS Telecom. The company offers wireless solutions to consumers, and business and government customers, including a suite of connected Internet of things (IoT) solutions, and software applications for monitor and control, business automation/operations, communication, fleet and asset management, smart water solutions, private cellular networks and custom, and end-to-end IoT solutions; wireless priority services and quality priority and preemption options; smartphones and other handsets, tablets, wearables, mobile hotspots, fixed wireless home internet, and IoT devices; and accessories, such as cases, screen protectors, chargers, and memory cards, as well as consumer electronics, including audio, home automation and networking products. It also provides replace and repair services; Trade-In program through which it buys customers' used equipment; internet connections and all-home Wi-Fi services; TDS TV+, an integrated cloud television platform that offers video content and features; local and long-distance telephone service, voice over internet protocol, and enhanced services; broadband, IP-based services, and hosted voice and video collaboration services; and communication services in underserved areas. The company sells its products through retail stores, direct and indirect sales, third-party retailers, and independent agents, as well as through ecommerce and telesales. Telephone and Data Systems, Inc. was incorporated in 1968 and is headquartered in Chicago, Illinois.

About Swisscom

Swisscom AG provides telecommunication services primarily in Switzerland, Italy, and internationally. It operates through three segments: Swisscom Switzerland, Fastweb, and Other Operating. The company offers mobile and fixed-network services, such as telephony, TV, broadband, and mobile offerings, as well as sells terminal equipment; and telecom and communications solutions for large corporations and small and medium-sized enterprises. It also provides cloud, outsourcing, workplace, mobile phone, networking, business process optimization, SAP, and security and authentication solutions, as well as a range of services to the banking industry; Internet of Things solutions; digitization services to the healthcare sector; IT systems for health insurance companies; fixed-line and mobile networks by other telecommunication service providers; and roaming to foreign operators whose customers use its mobile networks, as well as broadband services and regulated products. In addition, the company plans, operates, and maintains network infrastructure and IT systems; provides support functions to finance, human resource, and strategy, as well as management of real estate and vehicle fleet; and offers broadband and mobile services, such as telephony, mobile offerings, and broadband services, as well as ICT solutions for residential, business, and wholesale customers. Further, it provides IT and network services; online and telephone directories; and cross-platform retail media and security communication services, as well as builds and maintains wired and wireless networks. The company was founded in 1998 and is based in Bern, Switzerland.