Is Telephone and Data Systems Inc. (TDS) the Best Telecom Stock to Invest In Now?

Telephone and Data Systems Inc. (TDS) has been a prominent player in the telecommunications industry for decades, providing a range of services to consumers and businesses alike. As the market evolves and new technologies emerge, investors are increasingly looking for companies that can adapt and thrive in this dynamic environment. But is TDS the best telecom stock to invest in now? Let's analyze the company's recent performance, strategic moves, and market outlook to help answer this question.

Recent Performance and Strategic Moves

TDS reported total operating revenues of $1,224 million for the third quarter of 2024, a decrease from the same period last year. Net income attributable to TDS common shareholders and related diluted earnings per share were $(83) million and $(0.73), respectively, compared to $(17) million and $(0.16) in the same period last year. However, excluding a UScellular wireless spectrum license impairment, net income and diluted earnings per share were $2 million and $0.01, respectively.

TDS has made strategic moves to improve its financial performance, such as the sale of select spectrum assets for $1 billion to Verizon and the expansion of fixed wireless customers by 32% to 140,000. These moves have contributed to a 2% increase in postpaid ARPU and improved wireless operating results.



Market Outlook and Analyst Ratings

Analysts have a positive outlook on TDS, with an average price target of $45.5, indicating a 29.19% increase from the current price. The average rating from 2 analysts is "Buy," suggesting that they believe this stock is likely to outperform the market over the next twelve months.



Debt-to-Equity Ratio and Financial Health

TDS's current debt-to-equity ratio is 0.87, indicating a relatively balanced capital structure. Over the past five years, the ratio has fluctuated between 0.74 and 1.05, with a general downward trend. This suggests that TDS has been reducing its debt levels relative to equity, potentially improving its financial health and flexibility.

Revenue Growth and Profitability

TDS's revenue growth and profitability have been volatile in recent years. In 2023, revenue decreased by -4.67% to $5.16 billion, while losses increased by 8028.6% to -$569.00 million. However, analysts forecast a 29.19% increase in the stock price to $45.5 in the next 12 months, indicating potential upside.



Conclusion

TDS's recent strategic moves, such as the sale of spectrum assets and the expansion of fixed wireless customers, have positively impacted its long-term financial performance. The company's debt-to-equity ratio suggests a balanced capital structure, and analysts have a positive outlook on the stock. However, TDS's revenue growth and profitability have been volatile in recent years, and investors should carefully consider these factors before making an investment decision. In conclusion, TDS may be an attractive option for investors looking for exposure to the telecom industry, but it is essential to weigh the company's strengths and weaknesses against other potential investments.