The communications sector is comprised of a broad range of companies that sell phone and internet services via traditional landline, broadband, or wireless. The sector also includes companies that are major creators and producers of movies, television shows, and other content. Well-known companies in the communications sector sector include Facebook Inc. (FB), Comcast Corp. (CMCSA), and Walt Disney Co. (DIS).
The coronavirus pandemic has sharply boosted business for many entertainment and streaming services, while also causing plunging advertising at other companies. Communications stocks, as represented by the Communication Services Select Sector SPDR ETF (XLC), have outperformed the broader market, providing investors with a total return of 17.4% compared to the S&P 500's total return of 12.2% over the past 12 months. These market performance numbers and the statistics in the tables below are as of July 21.
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|
|Market Cap ($B)||12-Month Trailing P/E Ratio|
|ViacomCBS Inc. (VIAC)||24.47||15.1||5.5|
|Discovery Inc. (DISCA)||20.77||10.5||7.2|
|CenturyLink Inc. (CTL)||9.64||10.6||8.5|
- ViacomCBS Inc.: ViacomCBS is a global multimedia company focused on creating premium content and experiences for audiences across the world. The company provides cable networks, content production and distribution, television stations, and digital streaming services. It also operates other internet-based businesses as well as consumer publishing. ViacomCBS announced earlier this month that it had appointed Naveen Chopra as Executive Vice President and Chief Financial Officer (CFO), effective August 10, 2020. Chopra will join ViacomCBS from Amazon.com Inc. (AMZN), where he served as CFO of Amazon's Devices and Services unit.
- Discovery Inc.: Discovery is a global media company providing content across a number of distribution platforms, including pay-television, free-to-air and broadcast television, and digital distribution and content licensing arrangements. The company on May 6 reported a decline in net income of 2.6% on a 0.9% decline in revenue for Q1 2020 ended March 31. Discovery said it experienced no significant disruptions related to the fallout from COVID-19 over the quarter, but that the future impact is uncertain.
- CenturyLink Inc.: CenturyLink is an integrated communications company that offers various communications services, including local and long-distance voice, broadband, Ethernet, colocation, hosting, data integration, video, network, information technology, and more.
Fastest Growing Communications Stocks
These are the communications stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Communications Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Netflix Inc. (NFLX)||502.41||221.0||165.0|
|Take-Two Interactive Software Inc. (TTWO)||154.70||17.6||114.0|
|Electronic Arts Inc. (EA)||141.53||40.9||107.2|
- Netflix Inc.: Netflix is an Internet subscription services company that offers streaming movies and television shows, and also distributes DVDs by mail. Netflix increasingly is producing entertainment content. The company on July 16 reported net income growth of 165.7% on revenue growth of 24.9% for Q2 2020, which ended June 30, 2020. Netflix said that it added 26 million paid memberships through the first two quarters, comparable to 12 million during the same period a year ago, and almost as many as the 28 million additions during all of 2019.
- Take-Two Interactive Software Inc.: Take-Two Interactive Software develops, produces, and markets interactive software, including video games and related accessories. The company creates video games for consoles, handheld systems, personal computers, smart phones, and tablets.
- Electronic Arts Inc.: Electronic Arts is best known as a video game company. The company develops, publishes, and markets video game software for consoles, personal computers, mobile phones, and tablets. Electronic Arts announced in late May the renewal of a multi-year partnership with the National Football League (NFL) and the NFL Players Association (NFLPA) that gives EA exclusive rights to create authentic football simulation games as well as other esports games and programs across multiple platforms. EA says the partnership marks the biggest and widest-reaching gaming agreement in the history of the NFL.
Communications Stocks with the Most Momentum
These are the communications stocks that had the highest total return over the last 12 months.
|Communications Stocks with the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Activision Blizzard Inc. (ATVI)||81.16||62.5||81.0|
|Electronic Arts Inc. (EA)||141.53||40.9||61.8|
|Netflix Inc. (NFLX)||502.41||221.0||59.4|
|Communication Services Select Sector SPDR ETF||N/A||N/A||17.4|
- Activision Blizzard Inc.: Activision Blizzard publishes, develops, and distributes video games and related products. Some of its popular franchises include Call of Duty, Guitar Hero, and World of Warcraft. Activision Blizzard on May 5 reported net income growth of 13.0% on a 2.0% decline in net revenues for Q1 2020, which ended March 31, 2020.
- Electronic Arts Inc.: See above for company description.
- Netflix Inc.: See above for company description.
YCharts. "Financial Data." Accessed Jul. 21, 2020.
ViacomCBS Inc. "ViacomCBS Appoints Naveen Chopra as Executive Vice President, Chief Financial Officer." Accessed Jul. 21, 2020.
Discovery Inc. "Discovery, Inc. Reports First-Quarter 2020 Results." Accessed Jul. 21, 2020.
Netflix Inc. "Q2 2020 Letter to Shareholders," pages 1 & 2. Accessed Jul. 21, 2020.
Electronic Arts Inc. "Electronic Arts, the NFL and the NFLPA Announce a Groundbreaking Multi-Year Global Partnership." Accessed Jul. 21, 2020.
Activision Blizzard Inc. "ACTIVISION BLIZZARD ANNOUNCES STRONG FIRST-QUARTER 2020 FINANCIAL RESULTS." Accessed Jul. 21, 2020.