Telephone and Data Systems (NYSE:TDS) & Shaw Communications (OTCMKTS:SJRWF) Critical Comparison

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

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Telephone and Data Systems and Shaw Communications, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Telephone and Data Systems	0	3	2	0	2.40
Shaw Communications	0	0	0	0	0.00

Telephone and Data Systems currently has a consensus target price of $53.33, indicating a potential upside of 50.44%. Given Telephone and Data Systems’ stronger consensus rating and higher probable upside, analysts plainly believe Telephone and Data Systems is more favorable than Shaw Communications.

Earnings and Valuation

This table compares Telephone and Data Systems and Shaw Communications”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Telephone and Data Systems	$1.23 billion	3.28	-$6.24 million	$0.53	66.89
Shaw Communications	N/A	N/A	N/A	$1.82	16.49

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Telephone and Data Systems	6.15%	5.54%	2.49%
Shaw Communications	N/A	N/A	N/A

Dividends

Telephone and Data Systems pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Shaw Communications pays an annual dividend of $1.08 per share and has a dividend yield of 3.6%. Telephone and Data Systems pays out 30.2% of its earnings in the form of a dividend. Shaw Communications pays out 59.6% 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.

Insider and Institutional Ownership

80.0% of Telephone and Data Systems shares are owned by institutional investors. 14.2% of Telephone and Data Systems shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Telephone and Data Systems beats Shaw Communications on 11 of the 13 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 Shaw Communications

Shaw Communications Inc. operates as a connectivity company in North America. The company's Wireline segment provides cable telecommunications services, including video, Internet, WiFi, phone, satellite video, and data networking through a national fibre-optic backbone network to Canadian consumers, North American businesses, and public-sector entities. Its Wireless segment provides wireless services for voice and data communications serving customers in Ontario, British Columbia, and Alberta through Freedom Mobile; and in British Columbia and Alberta through Shaw Mobile. The company was formerly known as Shaw Cablesystems Ltd. and changed its name to Shaw Communications Inc. in May 1993. Shaw Communications Inc. was incorporated in 1966 and is headquartered in Calgary, Canada.