Analyzing Tele2 (OTCMKTS:TLTZY) & T-Mobile US (NASDAQ:TMUS)

T-Mobile US (NASDAQ:TMUS) and Tele2 (OTCMKTS:TLTZY) are both large-cap communication services companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.

Institutional & Insider Ownership

42.5% of T-Mobile US shares are owned by institutional investors. 0.3% of T-Mobile US 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.

Profitability

This table compares T-Mobile US and Tele2’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
T-Mobile US	11.45%	20.16%	5.41%
Tele2	33.96%	43.42%	15.54%

Dividends

T-Mobile US pays an annual dividend of $4.08 per share and has a dividend yield of 2.2%. Tele2 pays an annual dividend of $0.28 per share and has a dividend yield of 3.2%. T-Mobile US pays out 42.7% of its earnings in the form of a dividend. Tele2 pays out 35.9% 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. Tele2 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

T-Mobile US has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500. Comparatively, Tele2 has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500.

Earnings and Valuation

This table compares T-Mobile US and Tele2″s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
T-Mobile US	$92.19 billion	2.12	$10.99 billion	$9.55	19.09
Tele2	$3.06 billion	3.97	$468.79 million	$0.78	11.29

T-Mobile US has higher revenue and earnings than Tele2. Tele2 is trading at a lower price-to-earnings ratio than T-Mobile US, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current ratings and target prices for T-Mobile US and Tele2, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
T-Mobile US	0	8	21	1	2.77
Tele2	0	4	1	1	2.50

T-Mobile US currently has a consensus target price of $252.08, suggesting a potential upside of 38.25%. Given T-Mobile US’s stronger consensus rating and higher probable upside, equities research analysts plainly believe T-Mobile US is more favorable than Tele2.

Summary

T-Mobile US beats Tele2 on 9 of the 16 factors compared between the two stocks.

About T-Mobile US

T-Mobile US, Inc., together with its subsidiaries, provides mobile communications services in the United States, Puerto Rico, and the United States Virgin Islands. The company offers voice, messaging, and data services to customers in the postpaid, prepaid, and wholesale and other services. It also provides wireless devices, including smartphones, wearables, tablets, home broadband routers, and other mobile communication devices, as well as wireless devices and accessories; financing through equipment installment plans; reinsurance for device insurance policies and extended warranty contracts; leasing through JUMP! On Demand; and High Speed Internet services. In addition, the company offers services, devices, and accessories under the T-Mobile and Metro by T-Mobile brands through its owned and operated retail stores, T-Mobile app and customer care channels, and its websites. It also sells its devices to dealers and other third-party distributors for resale through independent third-party retail outlets and various third-party websites. The company was founded in 1994 and is headquartered in Bellevue, Washington.

About Tele2

Tele2 AB (publ) provides fixed and mobile connectivity, handset related data services, and entertainment services in Sweden, Lithuania, Latvia, and Estonia. The company offers mobile telephony and data, fixed broadband, fixed telephony, switch and contact center, cloud services, IT services, network services, workplace, video and collaboration, united communications, and security services. The company also provides data network services, including dark fiber, dedicated wavelength, ethernet and IP VPN, and internet services; and unified communications comprising service provider, mobile virtual network operator, and carrier SIP-interconnect services. In addition, it offers single and dual IMSI solutions for consumer and IoT applications; on-demand roaming services, such as subscription management, data plan management, real time charging, eSIM delivery, SIM management, and set up services; routing and termination solutions for international voice traffic; application-2-person messaging services; and value-added services comprising shortcodes and long numbers for businesses to have 2-way communication with their customers. The company was incorporated in 1990 and is headquartered in Kista, Sweden.