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What Makes Telephone and Data System (TDS) a Strong Buy?
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Earnings estimates for the current fiscal for Telephone and Data Systems, Inc. (TDS - Free Report) have surged 49% in the past three months, while that of the next fiscal has improved 31.7%. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Drivers
This Chicago, IL-based diversified telecom service provider owns an 83% stake in U.S. Cellular, the seventh-largest wireless operator in the United States (subscriber-wise), serving 4.68 million customers. Telephone and Data Systems is experiencing strong smartphone demand in U.S. Cellular. The addition of iPhone and other branded mobile phones, like Samsung Note series, is driving the company’s revenues. We believe that the long-term higher ARPU from smartphone users and full utilization of the LTE network capacity on the back of migration of customers to 4G networks are expected to mitigate the operating cost headwinds arising from higher subsidies on smartphones.
The company has been increasingly focusing on business services like cloud-based backup services and managed IP connections. Notably, managed IP connections have continued to increase. Moreover, its current personal cloud service — younited by F-Secure — has boosted the market share for Telephone and Data Systems and helped the company expand cloud services in the retail segment, beyond the conventional enterprise market. The company also plans to purchase and build a cloud TV platform across its wireline and cable markets. In addition, the company is planning to expand its service availability by increasing its fiber footprint. Despite the COVID-19 crisis, the company is currently focused on attracting new customers, adopting cost-saving initiatives, fiber fortification programs, network infrastructure advancement and steady 5G developments with robust demand for wired broadband services. Impressively, the company has kept the guidance for 2020 unchanged.
Moreover, Telephone and Data Systems is looking for lucrative opportunities to bring more fiber in order to better address services within its current footprint and adjacent areas. Leveraging on fiber, the telco is trying to respond to customers' growing TV and broadband services demand. In first-quarter 2020, the company’s total operating revenues amounted to $1,261 million, flat year over year despite uncertainties triggered by the coronavirus pandemic. Currently, the company is making investments to increase fiber deployment by expanding fiber and other technologies in its existing markets and overbuilding in new markets. All these investments have strengthened the company’s fiber-based broadband networks. Such strategic moves underscore the company’s efforts to diversify its business model from a telecom service provider to a fiber provider.
Telephone and Data Systems delivered a positive earnings surprise of 64.9%, on average, in the trailing four quarters. The stock has a VGM Score of A, signifying solid inherent potential. With a healthy dividend of 3.4%, this stock appears to be an enticing investment option for the volatile market.
Other Key Picks
Some other favorably-ranked stocks in the broader industry are InterDigital, Inc. (IDCC - Free Report) , PCTEL, Inc. and Ericsson (ERIC - Free Report) , each carrying a Zacks Rank #2 (Buy).
InterDigital has a long-term earnings growth expectation of 15%. It delivered a positive earnings surprise of 99.5%, on average, in the trailing four quarters.
PCTEL delivered a positive earnings surprise of 33.9%, on average, in the trailing four quarters.
Ericsson has a long-term earnings growth expectation of 25.9%. It delivered a positive earnings surprise of 4.6%, on average, in the trailing four quarters.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
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What Makes Telephone and Data System (TDS) a Strong Buy?
Earnings estimates for the current fiscal for Telephone and Data Systems, Inc. (TDS - Free Report) have surged 49% in the past three months, while that of the next fiscal has improved 31.7%. With healthy fundamentals, this Zacks Rank #1 (Strong Buy) stock appears to be a solid investment option at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Growth Drivers
This Chicago, IL-based diversified telecom service provider owns an 83% stake in U.S. Cellular, the seventh-largest wireless operator in the United States (subscriber-wise), serving 4.68 million customers. Telephone and Data Systems is experiencing strong smartphone demand in U.S. Cellular. The addition of iPhone and other branded mobile phones, like Samsung Note series, is driving the company’s revenues. We believe that the long-term higher ARPU from smartphone users and full utilization of the LTE network capacity on the back of migration of customers to 4G networks are expected to mitigate the operating cost headwinds arising from higher subsidies on smartphones.
The company has been increasingly focusing on business services like cloud-based backup services and managed IP connections. Notably, managed IP connections have continued to increase. Moreover, its current personal cloud service — younited by F-Secure — has boosted the market share for Telephone and Data Systems and helped the company expand cloud services in the retail segment, beyond the conventional enterprise market. The company also plans to purchase and build a cloud TV platform across its wireline and cable markets. In addition, the company is planning to expand its service availability by increasing its fiber footprint. Despite the COVID-19 crisis, the company is currently focused on attracting new customers, adopting cost-saving initiatives, fiber fortification programs, network infrastructure advancement and steady 5G developments with robust demand for wired broadband services. Impressively, the company has kept the guidance for 2020 unchanged.
Moreover, Telephone and Data Systems is looking for lucrative opportunities to bring more fiber in order to better address services within its current footprint and adjacent areas. Leveraging on fiber, the telco is trying to respond to customers' growing TV and broadband services demand. In first-quarter 2020, the company’s total operating revenues amounted to $1,261 million, flat year over year despite uncertainties triggered by the coronavirus pandemic. Currently, the company is making investments to increase fiber deployment by expanding fiber and other technologies in its existing markets and overbuilding in new markets. All these investments have strengthened the company’s fiber-based broadband networks. Such strategic moves underscore the company’s efforts to diversify its business model from a telecom service provider to a fiber provider.
Telephone and Data Systems delivered a positive earnings surprise of 64.9%, on average, in the trailing four quarters. The stock has a VGM Score of A, signifying solid inherent potential. With a healthy dividend of 3.4%, this stock appears to be an enticing investment option for the volatile market.
Other Key Picks
Some other favorably-ranked stocks in the broader industry are InterDigital, Inc. (IDCC - Free Report) , PCTEL, Inc. and Ericsson (ERIC - Free Report) , each carrying a Zacks Rank #2 (Buy).
InterDigital has a long-term earnings growth expectation of 15%. It delivered a positive earnings surprise of 99.5%, on average, in the trailing four quarters.
PCTEL delivered a positive earnings surprise of 33.9%, on average, in the trailing four quarters.
Ericsson has a long-term earnings growth expectation of 25.9%. It delivered a positive earnings surprise of 4.6%, on average, in the trailing four quarters.
Just Released: Zacks’ 7 Best Stocks for Today
Experts extracted 7 stocks from the list of 220 Zacks Rank #1 Strong Buys that has beaten the market more than 2X over with a stunning average gain of +24.1% per year.
These 7 were selected because of their superior potential for immediate breakout.
See these time-sensitive tickers now >>