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Communications companies include any services related to land-line, fiber optic, wireless, cable or cellular communication. Companies within this sector also may be major creators and producers of movies, television shows and other content. This sector includes major companies like Verizon Communications Inc. (VZ) and CBS Inc. (CBS), as well as smaller, more regional companies such as Cincinnati Bell Inc. (CBB). As represented by the Communications Services Select Sector SPDR ETC (XLC), the sector has slightly outperformed the S&P 500 index over the past 12 months, gaining 17.3% compared with S&P gains of 16.3%. All figures are as of November 19, 2019.
Below, we’ll take a closer look at the top 3 communications stocks with the best value, the fastest earnings growth, and the most momentum.
Communications Stocks with the Best Value
Here are the communications stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- CBS Corp.: One of the most recognizable names in media, CBS is a multimedia conglomerate operating broadcasting, television production, and other businesses. CBS operates television stations, produces programming, publishes books, and provides additional media content. In August of 2019, CBS announced that it would merge with Viacom in an all-stock merger to become one of the largest media companies in the world.
- Viacom Inc.: Like CBS, Viacom is a multimedia company focused on television production. Viacom also has interests in film, online content, video games, and more. In preparation for its merger with CBS, the two companies recently announced a slate of executive leaders for the combined business, which is named ViacomCBS.
- Electronic Arts Inc.: Electronic Arts is best known as a video game company. This firm develops, publishes, and markets video game software for consoles, personal computers, mobile devices, and more. Electronic Arts recently revealed plans for early 2020 to connect its EA Access games subscription service to Steam, the popular video game distribution platform.
Communications Stocks with the Fastest Earnings Growth
Here are the communications stocks in the S&P 500 with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Electronic Arts Inc.: See company description above.
- Take-Two Interactive Software Inc.: As its name suggests, Take-Two Interactive Software develops, produces, and markets interactive software including video games and related accessories. This business creates video games for consoles, handheld systems, and personal computers. For its fiscal Q2 2020, ending September 30, 2019, Take-Two reported GAAP net revenue growth of 74% YOY to $857.8 million.
- Netflix Inc.: Netflix is one of the leading media subscription services available today. It develops, produces, and distributes television shows and movies to streaming subscribers in the U.S. and elsewhere around the world. In Q3 2019, Netflix saw revenue grow to $5.2 billion, an increase of 31% YOY.
Communications Stocks with the Most Momentum
These are the communications stocks in the S&P 500 that had the greatest total return over the past 12 months.
|Communications Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Charter Communications Inc. (CHTR)||474.07||100.9||44.3|
|Facebook Inc. (FB)||197.40||562.9||41.5|
|AT&T Inc. (T)||39.63||289.5||39.1|
|S&P 500 (SPY)||—||—||16.3|
|Communications Services Select Sector SPDR ETC (XLC)||—||—||17.3|
- Charter Communications: Cable telecommunications company Charter Communications provides cable broadcasting services as well as a variety of personal and business communications offerings. Most of Charter’s business lies with its cable and internet customers as Charter offers a much smaller mobile phone service than its competitors.
- Facebook Inc.: Facebook as a business is synonymous with the company’s namesake social networking platform. This service allows individuals to communicate with other users through sharing of information, photographs, videos, messages, and more. Facebook has been at the center of a prolonged and heated debate about the role of social media in the U.S. political process, and the company recently announced a series of measures aimed at curbing foreign influence, increasing transparency, and reducing misinformation on its platform.
- AT&T Inc.: Besides its history as a wired telephone services provider (and now a mobile phone service), AT&T also owns the Time Warner media portfolio. After a prolonged legal battle surrounding the merger with Time Warner, an appeals court ruling in February 2019 allowed the merger to proceed.
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