The firm cited Telephone & Data-owned U.S. Cellular (USM) has begun to turnaround and the company will benefit from monetization of its non-core portfolio.
Shares of the telecommunications company closed at $23.47 yesterday.
Separately, TheStreet Ratings team rates TELEPHONE & DATA SYSTEMS INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
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"We rate TELEPHONE & DATA SYSTEMS INC (TDS) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Despite its growing revenue, the company underperformed as compared with the industry average of 1.8%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.42, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.44, which illustrates the ability to avoid short-term cash problems.
- The gross profit margin for TELEPHONE & DATA SYSTEMS INC is rather high; currently it is at 51.51%. Regardless of TDS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TDS's net profit margin of -1.78% significantly underperformed when compared to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Wireless Telecommunication Services industry. The net income has significantly decreased by 114.1% when compared to the same quarter one year ago, falling from $156.08 million to -$22.04 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, TELEPHONE & DATA SYSTEMS INC's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: TDS Ratings Report