Which Telecom Giant Is the Strongest Investment? These Five Metrics Speak Volumes!
admin|May 17, 2017
There’s a war going on. It’s being waged on American soil,
And no, it doesn’t involve tanks, WMDs or F-16s. Nothing like that.
The warring factions are not countries. They’re cellphone companies. And AT&T, T-Mobile, Verizon and Sprint are prepared to fight until the last carrier is standing.
Of the four contenders, T-Mobile is easily the most aggressive. Since 2013, the “uncarrier” has been courting customers with a wide array of perks, among them unlimited data, no contracts and free international roaming.
But T-Mobile’s competitors are sharp. They know that smartphone users aren’t loyal. They’ll jump ship as soon as something better comes along.
Something faster, sleeker… or cheaper.
The Consumer’s Triumph Is the Investor’s…
Obviously, this is great news for savvy consumers. They can score an incredible bargain.
But what does it mean for investors?
To answer that question, we have to do some digging. These telecom giants don’t make it easy for regular folks to look over their financials. Fortunately, we’ve done all the legwork.
There are five metrics we explore when researching telecom stocks. Each are specific factors that diagnose a company’s current health and its growth potential.
We’ll look at each of these metrics to see how these companies stack up.
| Telecom Companies | EPS 1-Year Growth |
| AT&T | -40% |
| Verizon | -19.81% |
| T-Mobile | 31.43% |
| Sprint | 42.86% |
One of the most important factors that affects a telecom company’s share price is the expected growth rate of its earnings.
I wasn’t surprised to see Sprint win this category.
| Telecom Companies | D/E Ratio |
| AT&T | 99.52% |
| Verizon | 449.73% |
| T-Mobile | 166.74% |
| Sprint | 196.43% |
The telecom industry is one of the most leveraged sectors out there. However, while debt and wireless carriers go together like peas in a pod, they can make for bad bedfellows.
That’s why the debt-to-equity ratio is such an instructive tool in this sector.
D/E ratio = Total Liabilities/Stockholders’ Equity
This formula gives you a company’s leverage and helps you gauge the sustainability of its debt level.
The higher the number, the higher the risk.
With the lowest ratio, AT&T has won this battle. A ratio of 99.52 is still fairly high, but we must account for how the debt is used. AT&T’s executives have historically used debt to fund the company’s expansion plans rather than issue more stock and dilute the power of shareholders.
| Telecom Companies | Cash Flow Growth Rate |
| AT&T | 1.64% |
| Verizon | -73.26% |
| T-Mobile | 107.68% |
| Sprint | -13.48% |
Free cash flow may be the purest measure of a company’s performance. It looks at operating cash flow minus capital expenditures.
This tells you how much cash a company has left over to do things like expand production and pay dividends.
The free cash flow growth rate tells us how likely the company is to continue these vital functions.
In this arena, T-Mobile wins by a landslide.
That trend looks to continue in 2017… a definite boon for cash flow.
| Telecom Companies | Monthly Churn Rate |
| AT&T | 1.71% |
| Verizon | 1.31% |
| T-Mobile | 2.39% |
| Sprint | 2.81% |
The churn rate is a crucial metric to follow in the telecom sector. It is the percentage of folks who cancel their subscriptions within a given time frame.
Telecom companies are generally getting better at holding onto customers. But Verizon is leading the pack with a monthly churn rate of 1.31%.
Still, Verizon has seen better days. The data plans of its competitors are driving up Verizon’s churn rate. That’s making it tougher for everyone to hold onto customers.
| Telecom Companies | ARPU |
| AT&T | $51.12 |
| Verizon | $45.54 |
| T-Mobile | $43.14 |
| Sprint | $43.49 |
The ARPU of a company is a telling metric – perhaps our favorite. It’s found by dividing a company’s total revenue by the number of customers. This measure tells us how much income a business generates in relation to the size of its customer base.
While Verizon, T-Mobile and Sprint are neck and neck, AT&T walks away with this one.
To conclude, as the winner of both ARPU and D/E ratio categories, AT&T takes the crown.
It has the best balance of metrics.
But there’s more to the story…
A $750 Billion Industry… With a Dark Secret
In the course of my research, I’ve uncovered something big.
I’d always had a suspicion that cellphones might not be as safe as we’re told, but what I’ve discovered now has me terrified.
In fact, the more I researched, the more scared I got.
The evidence is shocking.
Why isn’t the media covering this?
Why aren’t we being warned?
I’ve put together a special presentation that details my research.
But I have to warn you…
Once you watch this video, you’ll never look at cellphones – or the folks who sell them – the same way again.
Learn how to protect yourself today.
Be well,
Andy
