Shenandoah Telecommunications (NASDAQ: SHEN) and Otelco (NASDAQ:OTT) are both small-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.

Earnings & Valuation

This table compares Shenandoah Telecommunications and Otelco’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shenandoah Telecommunications $535.29 million 3.49 -$890,000.00 $0.12 316.42
Otelco N/A N/A N/A ($9.59) -0.25

Otelco has lower revenue, but higher earnings than Shenandoah Telecommunications. Otelco is trading at a lower price-to-earnings ratio than Shenandoah Telecommunications, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings for Shenandoah Telecommunications and Otelco, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shenandoah Telecommunications 0 0 1 0 3.00
Otelco 0 0 0 0 N/A

Shenandoah Telecommunications presently has a consensus target price of $35.00, indicating a potential downside of 7.82%. Given Shenandoah Telecommunications’ higher possible upside, analysts clearly believe Shenandoah Telecommunications is more favorable than Otelco.

Volatility & Risk

Shenandoah Telecommunications has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Otelco has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500.

Institutional and Insider Ownership

52.6% of Shenandoah Telecommunications shares are owned by institutional investors. 7.2% of Shenandoah Telecommunications shares are owned by company 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.

Dividends

Shenandoah Telecommunications pays an annual dividend of $0.26 per share and has a dividend yield of 0.7%. Otelco does not pay a dividend. Shenandoah Telecommunications pays out 216.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Shenandoah Telecommunications and Otelco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shenandoah Telecommunications 0.91% 4.04% 0.83%
Otelco N/A N/A N/A

Summary

Shenandoah Telecommunications beats Otelco on 11 of the 12 factors compared between the two stocks.

About Shenandoah Telecommunications

Shenandoah Telecommunications Company is a telecommunications holding company. The Company’s segments are Wireless, Cable, Wireline and Other. The Company, through its operating subsidiaries, provides both regulated and unregulated telecommunications services to end user customers and other telecommunications providers in Virginia, West Virginia, central Pennsylvania, western Maryland, and portions of Kentucky and Ohio. The business of the Wireless segment is conducted principally by the Company’s subsidiary, Shenandoah Personal Communications, LLC (PCS). The business of the Company’s Cable segment is conducted through Shenandoah Cable Television, LLC (Shenandoah Cable). The Wireline segment provides regulated and unregulated voice services, digital subscriber line (DSL) Internet access, cable modem and long distance access services throughout Shenandoah County and portions of Rockingham, Frederick, Warren and Augusta counties, Virginia.

About Otelco

Otelco Inc. provides a range of telecommunications services on a retail and wholesale basis. These services include local and long distance calling; network access to and from its customers; data transport; digital high-speed and dial-up Internet access; cable, satellite and Internet protocol television; wireless, and other telephone related services. The principal markets for these services are residential and business customers residing in and adjacent to the exchanges the Company serves in Alabama, Massachusetts, Maine, Missouri, Vermont and West Virginia. In addition, the Company serves business customers throughout Maine and New Hampshire and provides dial-up Internet service throughout the states of Maine and Missouri. In January 2014, the Company acquired Reliable Networks, a provider of cloud hosting and managed services for companies who rely on mission-critical applications.

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