Industry - Telecom

Telecom Industry Analysis, Research & Ratios (edit / improve)

Industry Analysis evaluates the major industry characteristics that affect investments. Company specific factors drive the performance of individual companies, but macro-economic factors can affect the performance, stock prices, growth rates, and chart movements of any stock, currency, or commodity. Review industry research before trading.

Industry Statistics Stat Notes
Stock Research Rating Hold
Potential (safety margin) -15% High ~ Good for investors
WACC Discount Rate 10% Low ~ Good for investors
Comparative Multiples Stat Notes
Revenue EV Multiple 3.3x High ~ Bad for investors
EBITDA EV Multiple 12.1x
EBIT EV Multiple 13.9x
Cash Flow EV Multiple 14.4x
Book Value EV Multiple 0.9x Low ~ Good for investors
Discounted Cash Flow (DCF) Ratios Notes
Revenue Growth 20% High ~ Good for investors
EBITDA Margin 28%
EBIT Margin 23% High ~ Good for investors
Cash Flow Margin 15% High ~ Good for investors
Taxes Rate 27%
Debt-Equity Ratio 6% Low ~ Good for investors
Reinvestment Rate 5%
WACC Discount Rate Rates Notes
Risk Free Rate 4% Low ~ Good for Investors
Cost of Debt 7% Low ~ Good for Investors
Equity Risk Premium 5%
Debt Required Return of Debt 5% Low ~ Good for Investors
Required Return of Equity 9% Low ~ Good for Investors

1 WikiWealth only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.

2 Investment potential (margin of safety) is a weighted average of the discounted cash flow (DCF), the enterprise value (EV) market multiple, and the Warren Buffett investment methods.

Description: The telecom industry includes companies who help transmit information for the purposes of communication (see full telecom description: competitors, industry ratios, best stocks, market leaders, aggregate SWOT Analysis, and streaming industry news).

Profit Analysis: The best way to profit from telecom stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street on left side), and have high Main Street Common Sense investment ratings (see Main Street on right side). When an economic recovery occurs, telecom stocks tend to outperform the general stock market, because consumers and businesses quickly resume spending on items they wanted, but resisted buying during tougher economic times. Eventually those investments become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to sell telecom stocks, because they are likely to decrease in price quickly. Telecom makes the lives of consumers and businesses easier, but during tough economic times, people tend to choose alternative means to communicate, which offsets the benefits of telecom investments temporarily. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments.

Trading Strategy: During economic recessions, consumers and businesses tend to cut back on telecom expenses to save money during tough economic times. Less spending decreases business revenue and eventually decreases stock prices. During economic recoveries, consumers have more income and business investment needs, so spending quickly increases. Higher spending increases business revenue and eventually increases stock prices. During a longer economic expansion, discretionary income and business demand increases, but at a slower pace than during the recovery stage.