Telephone and Data Systems (TDS) has returned to profitability with a third-quarter profit of $40 million, driven by asset sales and fiber expansion, alongside a new $500 million share buyback initiative.
Check out our latest analysis for Telephone and Data Systems.
Investors have responded positively, with shares currently priced at $39.40 and a notable year-to-date return of 14.27%. Furthermore, the three-year total shareholder return has reached 334.59%, indicating strong long-term momentum, despite recent trimming of holdings by Silver Point Capital.
If this change in sentiment prompts you to reconsider your strategy, it might be a good time to compare TDS with other telecom and infrastructure companies against broader market trends using fast-growing stocks that feature significant insider ownership.
With profitability returning, a substantial stock buyback, and shares trading below analyst price targets, should investors view TDS as an undervalued turnaround opportunity or assume that the market has already accounted for its fiber-driven growth?
Current Perspective: 19% Undervalued
TDS’s last closing price of $39.40 contrasts with its fair value estimate of around $48.67, pointing to how its ongoing transformation may unfold.
The sale of UScellular and significant spectrum assets has significantly reduced TDS’s debt, allowing for aggressive fiber infrastructure expansion and enabling strategic M&A opportunities that are likely to drive long-term revenue and earnings growth amidst increasing broadband demand.
Explore the complete narrative.
Curious why declining revenue projections are still compatible with rising profits and a higher future earnings multiple? Discover the detailed narrative behind this disconnect, including margin adjustments, growth trajectories, and discount rates that support this valuation view.
Conclusion: Fair Value at $48.67 (UNDERVALUED)
Read the full narrative to understand the underlying forecasts.
However, any execution failures during the wireless divestiture or slower-than-anticipated fiber adoption may pressure margins and hinder the expected revaluation of TDS shares.
Another Perspective: High Earnings Valuation
While the fair value narrative indicates potential upside, an earnings-based analysis suggests a different direction. TDS trades at a price-to-earnings ratio of approximately 80.8, significantly above the global wireless telecom average of 17.6 and its own fair ratio of 37.4. This highlights a dangerous valuation risk if investor sentiment declines.
Discover what the numbers reveal about this pricing — view our valuation analysis.
Construct Your Own Telephone and Data Systems Narrative
If you have a different perspective or wish to analyze the assumptions with your own inputs, you can create a fresh assessment in just a few minutes: Tailor it your way.
A great foundation for your TDS research is our analysis highlighting three significant rewards and one important warning sign that could affect your investment choices.
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This article from Simply Wall St provides general insights. We present commentary rooted in historical data and analyst predictions using an impartial methodology. Our articles do not constitute financial advice or stock recommendations, and do not consider your personal goals or financial circumstances. We aim to deliver long-term focused analysis based on fundamental data. Our analysis may not take into account the latest price-sensitive company announcements or qualitative information. Simply Wall St holds no positions in any mentioned stocks.
