Head-To-Head Contrast: Nippon Telegraph & Telephone (OTCMKTS:NTTYY) and Telephone & Data Systems (OTCMKTS:TDS)

Nippon Telegraph & Telephone (OTCMKTS:NTTYY) and Telephone & Data Systems (NYSE:TDS) are both utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their valuation, risk, institutional ownership, analyst recommendations, earnings, profitability and dividends.

Insider & Institutional Ownership

0.2% of Nippon Telegraph & Telephone shares are held by institutional investors. Comparatively, 82.0% of Telephone & Data Systems shares are held by institutional investors. 14.3% of Telephone & Data Systems shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Nippon Telegraph & Telephone and Telephone & Data Systems, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nippon Telegraph & Telephone 0 1 0 0 2.00
Telephone & Data Systems 0 1 3 0 2.75

Telephone & Data Systems has a consensus price target of $39.13, suggesting a potential upside of 45.66%. Given Telephone & Data Systems’ stronger consensus rating and higher probable upside, analysts plainly believe Telephone & Data Systems is more favorable than Nippon Telegraph & Telephone.

Profitability

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

Net Margins Return on Equity Return on Assets
Nippon Telegraph & Telephone 7.07% 7.21% 3.80%
Telephone & Data Systems 2.99% 2.89% 1.50%

Earnings & Valuation

This table compares Nippon Telegraph & Telephone and Telephone & Data Systems’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nippon Telegraph & Telephone $107.88 billion 0.89 $7.69 billion $4.00 12.15
Telephone & Data Systems $5.11 billion 0.60 $135.00 million $1.17 22.96

Nippon Telegraph & Telephone has higher revenue and earnings than Telephone & Data Systems. Nippon Telegraph & Telephone 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

Nippon Telegraph & Telephone pays an annual dividend of $1.67 per share and has a dividend yield of 3.4%. Telephone & Data Systems pays an annual dividend of $0.66 per share and has a dividend yield of 2.5%. Nippon Telegraph & Telephone pays out 41.8% of its earnings in the form of a dividend. Telephone & Data Systems pays out 56.4% 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. Telephone & Data Systems has raised its dividend for 44 consecutive years. Nippon Telegraph & Telephone is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Nippon Telegraph & Telephone has a beta of 0.11, indicating that its share price is 89% less volatile than the S&P 500. Comparatively, Telephone & Data Systems has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Summary

Nippon Telegraph & Telephone beats Telephone & Data Systems on 9 of the 17 factors compared between the two stocks.

About Nippon Telegraph & Telephone

Nippon Telegraph and Telephone Corporation, together with its subsidiaries, provides fixed and mobile voice related services, IP/packet communications services, telecommunications equipment, system integration, and other services in Japan and internationally. It operates through five segments: Regional Communications Business, Long Distance and International Communications Business, Mobile Communications Business, Data Communications Business, and Other Business. The company offers inter-prefectural communications services, services related to the international communications and solutions business, and related services; mobile phone and related services; and network system and system integration services. It also provides IT system building and maintenance support for corporations; professional security, ICT, data center-related, teleconference, Web conference, video conference, Internet connection, video distribution, and smart life area services; and consulting, and system design and development services. In addition, the company engages in the acquisition, development, leasing, and management of real estate properties; lease and installment sales of telecommunications-related devices; billing and collection of charges for communications and other services; and design, management, and maintenance of buildings, equipment, and electric power facilities. Further, it is involved in the development, production, operation, and maintenance of information communications systems and software; and technology transfer and consulting activities, as well as provision of credit card transaction settlement services. Additionally, the company operates office, retail, and residential properties under the Wellith brand; hotels and resorts; and shared-office properties that include daycare facilities and office spaces. As of March 31, 2018, it had 19,869 thousand fixed line subscriptions. The company was founded in 1952 and is headquartered in Tokyo, Japan.

About Telephone & Data Systems

Telephone and Data Systems, Inc., a telecommunications company, provides wireless, cable and wireline broadband, TV, voice, and hosted and managed services in the United States. It operates through three segments: U.S. Cellular, Wireline, and Cable. The company offers cellular services to postpaid and prepaid customers, including retail consumers, government entities, and small-to-mid-size business customers in industries, such as the construction, retail, agriculture, professional services, and real estate; and national plans with voice, messaging, and data usage options. It also provides wireless devices comprising handsets, tablets, mobile hotspots, home phones, and routers; accessories that include wireless essentials, which comprise cases, screen protectors, chargers, and memory cards, as well as various consumer electronics, such as headphones, smart speakers, wearables, and home automation products. In addition, the company offers telecommunications services to residential and commercial customers, as well as wholesale customers and wireless carriers; broadband and digital television (TV) video services; voice services comprising local and long-distance telephone, voice over Internet protocol (VoIP), find me follow me, collaboration, instant messaging, and other services; and network access services. Further, it provides business services, including data networking, Ethernet, broadband access, and VoIP services to small- and medium-sized businesses, as well as operates retail stores and kiosks. The company offers its services to approximately 6 million connections. It 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.

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