Critical Analysis: Spok (NASDAQ:SPOK) & Tele2 (OTCMKTS:TLTZY)

Tele2 (OTCMKTS:TLTZY) and Spok (NASDAQ:SPOK) are both communication services companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Institutional & Insider Ownership

50.8% of Spok shares are owned by institutional investors. 7.3% of Spok shares are owned by company 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.

Volatility & Risk

Tele2 has a beta of 0.39, meaning that its stock price is 61% less volatile than the S&P 500. Comparatively, Spok has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and price targets for Tele2 and Spok, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tele2	0	3	2	1	2.67
Spok	0	2	0	0	2.00

Spok has a consensus target price of $14.00, suggesting a potential upside of 27.50%. Given Spok’s higher probable upside, analysts clearly believe Spok is more favorable than Tele2.

Valuation & Earnings

This table compares Tele2 and Spok”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tele2	$3.06 billion	3.79	$468.79 million	$0.78	10.82
Spok	$139.71 million	1.64	$15.88 million	$0.58	18.93

Tele2 has higher revenue and earnings than Spok. Tele2 is trading at a lower price-to-earnings ratio than Spok, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Tele2 and Spok’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tele2	33.96%	43.42%	15.54%
Spok	9.00%	8.50%	6.08%

Dividends

Tele2 pays an annual dividend of $0.28 per share and has a dividend yield of 3.3%. Spok pays an annual dividend of $1.25 per share and has a dividend yield of 11.4%. Tele2 pays out 35.9% of its earnings in the form of a dividend. Spok pays out 215.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Tele2 beats Spok on 11 of the 17 factors compared between the two stocks.

About Tele2

Tele2 AB (publ) provides fixed and mobile connectivity, handset related data services, and entertainment services in Sweden, Lithuania, Latvia, and Estonia. The company offers mobile telephony and data, fixed broadband, fixed telephony, switch and contact center, cloud services, IT services, network services, workplace, video and collaboration, united communications, and security services. The company also provides data network services, including dark fiber, dedicated wavelength, ethernet and IP VPN, and internet services; and unified communications comprising service provider, mobile virtual network operator, and carrier SIP-interconnect services. In addition, it offers single and dual IMSI solutions for consumer and IoT applications; on-demand roaming services, such as subscription management, data plan management, real time charging, eSIM delivery, SIM management, and set up services; routing and termination solutions for international voice traffic; application-2-person messaging services; and value-added services comprising shortcodes and long numbers for businesses to have 2-way communication with their customers. The company was incorporated in 1990 and is headquartered in Kista, Sweden.

About Spok

Spok Holdings, Inc., through its subsidiary, Spok, Inc., provides healthcare communication solutions in the United States, Europe, Canada, Australia, Asia, and the Middle East. The company's products and services enhance workflows for clinicians and support administrative compliance. It delivers clinical information to care teams when and where it matters to enhance patient outcomes; and provides GenA Pager, a one-way alphanumeric pager. The company offers subscriptions to one-way or two-way messaging services, as well as alphanumeric pagers that are configurable to support unencrypted or encrypted operation; and ancillary services, such as voicemail, and equipment loss or maintenance protection services, as well as sells devices to resellers who lease or resell them to their subscribers. Its Spok Care Connect suite products for contact centers, clinical alerting and notification, mobile communications and messaging, and public safety notifications. In addition, the company provides professional, software license updates, and product support services, as well as sells third-party equipment. It serves businesses, professionals, management personnel, medical personnel, field sales personnel and service forces, members of the construction industry and construction trades, real estate brokers and developers, sales and services organizations, specialty trade organizations, manufacturing organizations, and government agencies. The company was formerly known as USA Mobility, Inc. and changed its name to Spok Holdings, Inc. in July 2014. Spok Holdings, Inc. was founded in 1986 and is headquartered in Alexandria, Virginia.