Cogent Communications (NASDAQ:CCOI) vs. Telephone and Data Systems (NYSE:TDS) Head-To-Head Analysis

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

Profitability

This table compares Telephone and Data Systems and Cogent Communications’ 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%
Cogent Communications	-4.73%	N/A	-4.86%

Valuation & Earnings

This table compares Telephone and Data Systems and Cogent Communications”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	3.18	-$6.24 million	$3.00	11.31
Cogent Communications	$975.77 million	0.42	-$182.17 million	($0.96)	-8.41

Telephone and Data Systems has higher revenue and earnings than Cogent Communications. Cogent 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.

Dividends

Telephone and Data Systems pays an annual dividend of $0.16 per share and has a dividend yield of 0.5%. Cogent Communications pays an annual dividend of $0.08 per share and has a dividend yield of 1.0%. Telephone and Data Systems pays out 5.3% of its earnings in the form of a dividend. Cogent Communications pays out -8.3% 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. Cogent Communications has increased its dividend for 14 consecutive years. Cogent Communications is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

80.0% of Telephone and Data Systems shares are held by institutional investors. Comparatively, 92.4% of Cogent Communications shares are held by institutional investors. 14.2% of Telephone and Data Systems shares are held by insiders. Comparatively, 4.2% of Cogent Communications 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.

Risk & Volatility

Telephone and Data Systems has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500. Comparatively, Cogent Communications has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Telephone and Data Systems and Cogent Communications, 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
Cogent Communications	2	6	3	0	2.09

Telephone and Data Systems presently has a consensus target price of $47.50, indicating a potential upside of 40.04%. Cogent Communications has a consensus target price of $19.55, indicating a potential upside of 142.26%. Given Cogent Communications’ higher probable upside, analysts clearly believe Cogent Communications is more favorable than Telephone and Data Systems.

Summary

Telephone and Data Systems beats Cogent Communications on 10 of the 17 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 Cogent Communications

Cogent Communications Holdings, Inc., through its subsidiaries, provides high-speed Internet access, private network, and data center colocation space services in North America, Europe, Oceania, South America, and Africa. The company offers on-net Internet access and private network services to law firms, financial services firms, and advertising and marketing firms, as well as heath care providers, educational institutions and other professional services businesses, other Internet service providers, telephone companies, cable television companies, web hosting companies, media service providers, mobile phone operators, content delivery network companies, and commercial content and application service providers. It also provides Internet access and private network services to customers that are not located in buildings directly connected to its network; and on-net services to customers located in buildings that are physically connected to its network. In addition, the company offers off-net services to corporate customers using other carriers' circuits to provide the last mile portion of the link from the customers' premises to the network. Further, it operates data centers that allow its customers to collocate their equipment and access the network. It serves primarily to small and medium-sized businesses, communications service providers, and other bandwidth-intensive organizations. Cogent Communications Holdings, Inc. was founded in 1999 and is headquartered in Washington, the District of Columbia.