T-Mobile US (NASDAQ:TMUS) vs. TIM (NYSE:TIMB) Critical Review

TIM (NYSE:TIMB) and T-Mobile US (NASDAQ:TMUS) are both communication services companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Volatility and Risk

TIM has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500. Comparatively, T-Mobile US has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
TIM	14.76%	17.88%	7.64%
T-Mobile US	12.05%	21.47%	5.68%

Dividends

TIM pays an annual dividend of $1.05 per share and has a dividend yield of 5.5%. T-Mobile US pays an annual dividend of $4.08 per share and has a dividend yield of 2.4%. TIM pays out 64.0% of its earnings in the form of a dividend. T-Mobile US pays out 39.4% 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 Ratings

This is a breakdown of current recommendations for TIM and T-Mobile US, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TIM	0	10	2	0	2.17
T-Mobile US	0	6	20	1	2.81

TIM presently has a consensus target price of $23.98, indicating a potential upside of 25.70%. T-Mobile US has a consensus target price of $235.13, indicating a potential upside of 38.35%. Given T-Mobile US’s stronger consensus rating and higher probable upside, analysts plainly believe T-Mobile US is more favorable than TIM.

Valuation and Earnings

This table compares TIM and T-Mobile US”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TIM	$4.77 billion	1.91	$772.28 million	$1.64	11.63
T-Mobile US	$88.31 billion	2.04	$10.99 billion	$10.36	16.40

T-Mobile US has higher revenue and earnings than TIM. TIM 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 and Institutional Ownership

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

Summary

T-Mobile US beats TIM on 14 of the 17 factors compared between the two stocks.

About TIM

TIM S.A. is a Brazilian telecommunications company that provides mobile voice and data services to consumers and businesses. Its offerings include mobile plans, internet access and digital services, supported by its wireless network. The company also offers fixed broadband services, including fiber-optic internet, under the TIM brand. It serves customers across Brazil, with mobile coverage extending throughout the country. TIM began operating in Brazil in 1998 and has since expanded its network and range of telecommunications services.

About T-Mobile US

T-Mobile US, Inc. is a wireless communications provider serving consumers, businesses and government customers in the United States. Its services include wireless voice, messaging and data, as well as broadband internet delivered over its wireless network. The company offers service under the T-Mobile and Metro by T-Mobile brands. Its products and services include mobile plans, smartphones and other connected devices, home internet, and solutions for business customers. T-Mobile traces its roots to VoiceStream Wireless, which Deutsche Telekom acquired in 2001.