The communications sector is comprised of a broad range of companies that sell phone and internet services via traditional landline, broadband, or wireless. Well-known companies in the communications sector include Facebook Inc. (FB), Comcast Corp. (CMCSA), and T-Mobile U.S. Inc. (TMUS). The sector also includes companies that are major creators and producers of movies, television shows, and other content. The COVID-19 pandemic has sharply boosted user activity for many entertainment and streaming services, while also causing plunging advertising at some companies.
Communications stocks, as represented by the Communication Services Select Sector SPDR ETF (XLC), have outperformed the broader market. XLC has provided a total return of 16.2% over the past 12 months, above the Russell 1000's total return of 11.0%, as of September 23, 2020. All statistics in the tables below are as of September 24.
Here are the top 3 communications stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Communications Stocks
These are the communications stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. 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.
|Best Value Communications Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|ViacomCBS Inc. (VIAC)||28.82||17.8||7.1|
|Lumen Technologies Inc. (LUMN)||10.05||11.0||8.9|
|Discovery Inc. (DISCK)||19.12||9.7||9.7|
- ViacomCBS Inc.: ViacomCBS is a global multimedia company focused on creating premium content and experiences for audiences across the world. The company provides cable networks, content production and distribution, television stations, and digital streaming services. It also operates other internet-based businesses as well as consumer publishing. ViacomCBS recently announced the launch of a new global streaming service. The company announced on September 15 that its subscription video on-demand and live streaming service, CBS All Access, will be rebranded under the name Paramount+ in early 2021 and extended to certain international markets.
- Lumen Technologies Inc.: Lumen Technologies, formerly known as CenturyLink, is an integrated communications company that offers various communications services, including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.
- Discovery Inc.: Discovery is a global media company providing content across a number of distribution platforms, including pay-television, free-to-air and broadcast television, and digital distribution and content licensing arrangements. The company reported a 69.6% decline in net income as revenue fell 11.9% in Q2 2020, which ended June 30, 2020. Discovery said that advertising revenue decreased 14%, primarily driven by lower demand during the pandemic.
Fastest Growing Communications Stocks
These are the communications stocks 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.
|Fastest Growing Communications Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Zoom Video Communications Inc. (ZM)||500.53||142.4||3,050|
|Liberty Broadband Corp. (LBRDA)||139.83||25.4||457.1|
|John Wiley & Sons Inc. (JW.A)||31.69||1.8||383.3|
- Zoom Video Communications Inc.: Zoom Video Communications is a provider of video-first communication platform and Web conferencing services. It offers cloud-based HD video conferencing, mobility, and Web meetings. Zoom reported net income growth of 3,256.6% on revenue growth of 355.0% in Q2 of its 2021 fiscal year (FY), the three-month period ended July 31, 2020. The major driver of growth was an explosion of Zoom video meetings by companies and individuals as rising numbers of people have been sheltered at home during the pandemic.
- Liberty Broadband Corp.: Liberty Broadband is a holding company that engages in the cable, broadband, and mobile technology businesses. Its principal assets consist of its interest in Charter Communications Inc. (CHTR) and TruePosition Inc. The company announced in early August that it had reached a definitive merger agreement to acquire telecommunications company GCI Liberty Inc. (GLIBA). The transaction is expected to close during the first half of 2021.
- John Wiley & Sons Inc.: John Wiley & Sons is a publishing company that specializes in scientific, technical, and medical books and journals, as well as professional and consumer books in both print and digital formats. The company also offers textbooks and educational materials.
Communications Stocks with the Most Momentum
These are the communications stocks that had the highest total return over the last 12 months.
|Communications Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Zoom Video Communications Inc. (ZM)||500.53||142.4||505.8|
|Zillow Group Inc. (ZG)||95.93||21.8||218.4|
|Twilio Inc. (TWLO)||232.00||33.2||105.4|
|Communication Services Select Sector SPDR ETF (XLC)||N/A||N/A||16.2|
- Zoom Video Communications Inc.: See above for company description.
- Zillow Group Inc.: Zillow is an online real estate database company. It provides information about homes, real estate listings, and mortgages through its website and mobile applications. Aided by falling mortgage rates, the company's consolidated quarterly revenue rose 28% compared to the same quarter a year earlier, driven primarily by a continued increase in resale volume. Also, traffic to Zillow Group’s mobile apps and websites rose to a record. Despite these positive trends, the company reported a net loss of $84.4 million in Q2 2020 ended June 30, 2020, higher than the net loss of $72.0 million posted in the year-ago quarter.
- Twilio Inc.: Twilio develops communications software and a cloud-based platform for web developers. Its platform enables developers to integrate phone calls, internet protocol voice communications, and text messages into web, mobile, and phone applications.
YCharts. "Financial Data." Accessed Sep. 24, 2020.
ViacomCBS Inc. "VIACOMCBS UNVEILS BRAND FOR UPCOMING GLOBAL STREAMING SERVICE: PARAMOUNT+." Accessed Sep. 27, 2020.
Discovery Inc. "Discovery, Inc. Reports Second-Quarter 2020 Results." Accessed Sep. 27, 2020.
Zoom Video Communications Inc. "Zoom Reports Second Quarter Results for Fiscal Year 2021." Accessed Sep. 27, 2020.
Liberty Broadband Corp. "Liberty Broadband And GCI Liberty Announce Proposed Combination." Accessed Sep. 27, 2020.
Zillow Group Inc. "Zillow Group Reports Second Quarter 2020 Financial Results," Page 2. Accessed Sep. 27, 2020.