Comparing TIM Participacoes (TSU) and United States Cellular Corporation (USM)

TIM Participacoes (NYSE: TSU) and United States Cellular Corporation (NYSE:USM) are both mid-cap computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, valuation, earnings, dividends, institutional ownership, risk and analyst recommendations.

Volatility and Risk

TIM Participacoes has a beta of 1.55, suggesting that its stock price is 55% more volatile than the S&P 500. Comparatively, United States Cellular Corporation has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Dividends

TIM Participacoes pays an annual dividend of $0.07 per share and has a dividend yield of 0.4%. United States Cellular Corporation does not pay a dividend. TIM Participacoes pays out 12.3% of its earnings in the form of a dividend. United States Cellular Corporation has raised its dividend for 4 consecutive years.

Earnings & Valuation

This table compares TIM Participacoes and United States Cellular Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TIM Participacoes $4.97 billion 1.87 $1.17 billion $0.57 33.72
United States Cellular Corporation $3.88 billion 0.81 $625.00 million $0.58 63.31

TIM Participacoes has higher revenue and earnings than United States Cellular Corporation. TIM Participacoes is trading at a lower price-to-earnings ratio than United States Cellular Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares TIM Participacoes and United States Cellular Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TIM Participacoes 5.07% 5.21% 2.71%
United States Cellular Corporation 1.26% 1.12% 0.58%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for TIM Participacoes and United States Cellular Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TIM Participacoes 1 1 5 0 2.57
United States Cellular Corporation 1 2 0 0 1.67

TIM Participacoes currently has a consensus target price of $19.00, suggesting a potential downside of 1.14%. United States Cellular Corporation has a consensus target price of $35.50, suggesting a potential downside of 3.32%. Given TIM Participacoes’ stronger consensus rating and higher possible upside, research analysts clearly believe TIM Participacoes is more favorable than United States Cellular Corporation.

Institutional & Insider Ownership

16.5% of TIM Participacoes shares are owned by institutional investors. Comparatively, 14.8% of United States Cellular Corporation shares are owned by institutional investors. 1.6% of United States Cellular Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

TIM Participacoes beats United States Cellular Corporation on 12 of the 17 factors compared between the two stocks.

About TIM Participacoes

TIM Participacoes S.A. (TIM) is a provider of mobile telecommunication services in Brazil. The Company, through its subsidiaries in various telecommunications markets, operates mobile, fixed and long distance telephony, data transmission and ultra-broadband services. Its direct subsidiaries include TIM Celular S.A., which provides landline telephone services (commuted fixed telephonic service (STFC))-domestic long distance and international long distance voice services, personal mobile service (SMP) and multimedia communication service (multimedia service of communication (SCM)) in all Brazilian states and in the Federal District, and Intelig Telecomunicacoes Ltda., which provides STFC-local voices services and SCM services in all Brazilian states and in the Federal District. Its consumer plans include prepaid plans, post-paid plans and controle plans. It offers value-added services, including short message services or text messaging, multimedia messaging services and push-mail.

About United States Cellular Corporation

United States Cellular Corporation (U.S. Cellular) is a provider of wireless telecommunication services. The Company’s wireless operating markets are in the United States. U.S. Cellular provides service to postpaid and prepaid customers from a range of demographic segments. The Company focuses on retail consumers, government and small-to-mid-size business customers in industries, such as construction, retail, professional services and real estate. The Company offers a range of wireless devices, such as handsets, modems, mobile hotspots, home phones and tablets for use by its customers. U.S. Cellular offers wireless devices that are compatible with fourth generation long term evolution (4G LTE) and third generation (3G) networks. U.S. Cellular offers a range of accessories, such as carrying cases, hands-free devices, batteries, battery chargers, and memory cards to related consumer electronics, such as headphones, speakers and Bluetooth keyboards.

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