Telephone and Data Systems (NYSE:TDS – Get Free Report) and Liberty Latin America (NASDAQ:LILA – Get Free Report) are both communication services companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.
Institutional and Insider Ownership
80.0% of Telephone and Data Systems shares are owned by institutional investors. Comparatively, 18.5% of Liberty Latin America shares are owned by institutional investors. 14.2% of Telephone and Data Systems shares are owned by insiders. Comparatively, 6.2% of Liberty Latin America shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Telephone and Data Systems and Liberty Latin America”s gross 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 | 3.35 | -$6.24 million | $3.00 | 11.92 |
| Liberty Latin America | $4.46 billion | 0.34 | -$611.20 million | ($0.49) | -15.84 |
Telephone and Data Systems has higher earnings, but lower revenue than Liberty Latin America. Liberty Latin America 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.
Volatility and Risk
Telephone and Data Systems has a beta of 0.32, meaning that its stock price is 68% less volatile than the S&P 500. Comparatively, Liberty Latin America has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent ratings for Telephone and Data Systems and Liberty Latin America, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Telephone and Data Systems | 0 | 3 | 2 | 0 | 2.40 |
| Liberty Latin America | 2 | 1 | 1 | 0 | 1.75 |
Telephone and Data Systems currently has a consensus price target of $47.50, suggesting a potential upside of 32.78%. Liberty Latin America has a consensus price target of $10.00, suggesting a potential upside of 28.87%. 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 Liberty Latin America.
Profitability
This table compares Telephone and Data Systems and Liberty Latin America’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% |
| Liberty Latin America | -2.20% | -9.29% | -0.81% |
Summary
Telephone and Data Systems beats Liberty Latin America on 12 of the 14 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 Liberty Latin America
Liberty Latin America Ltd., together with its subsidiaries, provides fixed, mobile, and subsea telecommunications services. The company operates through C&W Caribbean, C&W Panama, Liberty Networks, Liberty Puerto Rico, and Liberty Costa Rico segments. It offers communications and entertainment services, including video, broadband internet, fixed-line, telephony, and mobiles services to residential and business customers; and business products and services that include enterprise-grade connectivity, data center, hosting, and managed solutions, as well as information technology solutions for small and medium enterprises, international companies, and governmental agencies. The company also operates a sub-sea and terrestrial fiber optic cable network that connects approximately 40 markets. It provides its services under the brands of C&W, Liberty Costa Rica, Liberty Communications, BTC, Flow, and Mas Móvil. The company was incorporated in 2017 and is based in Hamilton, Bermuda.
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