T-Mobile US (NASDAQ:TMUS) versus KDDI (OTCMKTS:KDDIY) Critical Review

T-Mobile US (NASDAQ:TMUS) and KDDI (OTCMKTS:KDDIY) are both large-cap communication services companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Dividends

T-Mobile US pays an annual dividend of $4.08 per share and has a dividend yield of 2.3%. KDDI pays an annual dividend of $0.30 per share and has a dividend yield of 1.6%. T-Mobile US pays out 42.7% of its earnings in the form of a dividend. KDDI pays out 24.2% 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.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for T-Mobile US and KDDI, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
T-Mobile US	0	7	22	1	2.80
KDDI	1	0	0	1	2.50

T-Mobile US presently has a consensus target price of $252.08, indicating a potential upside of 42.35%. Given T-Mobile US’s stronger consensus rating and higher possible upside, equities analysts clearly believe T-Mobile US is more favorable than KDDI.

Risk and Volatility

T-Mobile US has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, KDDI has a beta of 0.05, meaning that its share price is 95% less volatile than the S&P 500.

Profitability

This table compares T-Mobile US and KDDI’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
T-Mobile US	11.45%	20.16%	5.41%
KDDI	N/A	N/A	N/A

Valuation and Earnings

This table compares T-Mobile US and KDDI”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
T-Mobile US	$88.31 billion	2.15	$10.99 billion	$9.55	18.54
KDDI	$40.34 billion	1.83	$4.67 billion	$1.24	14.85

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

Insider & Institutional Ownership

42.5% of T-Mobile US shares are held by institutional investors. Comparatively, 0.1% of KDDI shares are held by institutional investors. 0.3% of T-Mobile US shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

T-Mobile US beats KDDI on 15 of the 16 factors compared between the two stocks.

About T-Mobile US

T-Mobile US, Inc., together with its subsidiaries, provides mobile communications services in the United States, Puerto Rico, and the United States Virgin Islands. The company offers voice, messaging, and data services to customers in the postpaid, prepaid, and wholesale and other services. It also provides wireless devices, including smartphones, wearables, tablets, home broadband routers, and other mobile communication devices, as well as wireless devices and accessories; financing through equipment installment plans; reinsurance for device insurance policies and extended warranty contracts; leasing through JUMP! On Demand; and High Speed Internet services. In addition, the company offers services, devices, and accessories under the T-Mobile and Metro by T-Mobile brands through its owned and operated retail stores, T-Mobile app and customer care channels, and its websites. It also sells its devices to dealers and other third-party distributors for resale through independent third-party retail outlets and various third-party websites. The company was founded in 1994 and is headquartered in Bellevue, Washington.

About KDDI

KDDI Corporation provides telecommunications services in Japan and internationally. It operates in two segments, Personal Services and Business Services. The Personal Services segment offers telecommunication services and other services such as finance, energy, and LX through its multi-brands au, UQ mobile, and povo. The Business Services segment offers smartphones and other devices, network and cloud services, and data center services to corporate customers under the TELEHOUSE brand. The company was incorporated in 1984 and is headquartered in Tokyo, Japan.