Critical Review: Shenandoah Telecommunications (NASDAQ:SHEN) vs. AT&T (NASDAQ:T)

Shenandoah Telecommunications (NASDAQ:SHEN) and AT&T (NYSE:T) are both utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, institutional ownership, dividends, valuation and profitability.

Risk & Volatility

Shenandoah Telecommunications has a beta of 0.33, indicating that its share price is 67% less volatile than the S&P 500. Comparatively, AT&T has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500.

Profitability

This table compares Shenandoah Telecommunications and AT&T’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shenandoah Telecommunications 9.00% 12.75% 3.49%
AT&T 9.47% 13.38% 4.75%

Valuation and Earnings

This table compares Shenandoah Telecommunications and AT&T’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shenandoah Telecommunications $630.85 million 2.65 $46.60 million $0.93 35.99
AT&T $170.76 billion 1.47 $19.37 billion $3.52 9.74

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Shenandoah Telecommunications and AT&T, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shenandoah Telecommunications 0 1 3 0 2.75
AT&T 0 7 11 0 2.61

Shenandoah Telecommunications currently has a consensus target price of $48.33, suggesting a potential upside of 44.41%. AT&T has a consensus target price of $36.72, suggesting a potential upside of 7.08%. Given Shenandoah Telecommunications’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Shenandoah Telecommunications is more favorable than AT&T.

Insider and Institutional Ownership

49.3% of Shenandoah Telecommunications shares are held by institutional investors. Comparatively, 53.1% of AT&T shares are held by institutional investors. 4.7% of Shenandoah Telecommunications shares are held by insiders. Comparatively, 0.1% of AT&T shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Shenandoah Telecommunications pays an annual dividend of $0.27 per share and has a dividend yield of 0.8%. AT&T pays an annual dividend of $2.04 per share and has a dividend yield of 5.9%. Shenandoah Telecommunications pays out 29.0% of its earnings in the form of a dividend. AT&T pays out 58.0% 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. Shenandoah Telecommunications has increased its dividend for 6 consecutive years and AT&T has increased its dividend for 34 consecutive years. AT&T is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

AT&T beats Shenandoah Telecommunications on 11 of the 17 factors compared between the two stocks.

Shenandoah Telecommunications Company Profile

Shenandoah Telecommunications Company, through its subsidiaries, primarily provides wireless, cable, and wireline telecommunications services to customers and other telecommunications providers. The company operates in three segments: Wireless, Cable, and Wireline. The Wireless segment provides digital wireless mobile services; and wireless mobility communications network products and services. It owns 208 cell site towers built on leased land and owned land; and leases space on towers to affiliated and non-affiliated third party wireless service providers. This segment provides its services in central and western Virginia, south-central Pennsylvania, West Virginia, Maryland, North Carolina, Kentucky, Tennessee, and Ohio. The Cable segment offers video, broadband, and voice services in Virginia, West Virginia, and western Maryland; and leases fiber optic facilities. The Wireline segment provides regulated and unregulated voice services, Internet broadband, and long distance access services, as well as leases fiber optic facilities throughout portions of Virginia, West Virginia, Maryland, and Pennsylvania. Shenandoah Telecommunications Company also maintains an interstate fiber optic network; and offers unregulated communications equipment sales and services. The company provides its products and services under the Sprint and Shentel brands. Shenandoah Telecommunications Company was founded in 1902 and is headquartered in Edinburg, Virginia.

AT&T Company Profile

AT&T Inc. provides telecommunication, media, and technology services worldwide. The company operates through four segments: Communications, WarnerMedia, Latin America, and Xandr. The Communications segment provides wireless and wireline telecom, video, and broadband and Internet services; video entertainment services using satellite, IP-based, and streaming options; and audio programming services under the AT&T, Cricket, AT&T PREPAID, and DIRECTV brands to residential and business customers. This segment also sells handsets, wirelessly enabled computers, and wireless data cards manufactured by various suppliers for use with company's voice and data services, as well as various accessories, such as carrying cases and hands-free devices through the company-owned stores, agents, and third-party retail stores. The WarnerMedia segment primarily produces, distributes, and licenses television programming and feature films; distributes home entertainment products in physical and digital formats; and produces and distributes mobile and console games, and consumer products, as well as offers brand licensing services. It also operates cable networks, multichannel premium pay television, and over-the-top services; and digital media properties. The Latin America segment offers video entertainment and audio programming services under the DIRECTV and SKY brands primarily to residential customers; pay-TV services, including HD sports video content; and postpaid and prepaid wireless services under the AT&T and Unefon brands, as well as sells various handsets through company-owned stores, agents, and third-party retail stores. The Xandr segment provides digital advertising services. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.

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