Top 15 Communication Services Stocks by Business Quality
Marvin ranked 15 Communication Services companies by Business Quality score. Alphabet (GOOGL and GOOG), TKO, Anterix, Sirius XM and The Trade Desk are near the top. Scores compare each company with others in its own industry.
Communication Services covers companies that connect people or deliver content, such as internet platforms, streaming and entertainment, advertising, publishing and phone networks. Because these businesses work so differently, one yardstick for all of them can mislead.
This list shows 15 companies whose businesses Marvin rates most strongly, with the highest Business Quality score first. Each blurb uses a few simple figures: growth, profit margins, return on equity and debt. These help show how a company earns money and how much it borrows.
Keep in mind that scores are relative to each company's own industry, and some figures are missing for some companies. A strong score describes the business today. It is not a forecast or a recommendation.
The list
How Marvin ranked these stocks
Marvin included companies above a minimum size, ranked them by Marvin scores (out of one hundred, relative to each company's own industry), and kept only the Communication Services sector. The list is ordered by Business Quality score, highest first, with at most four companies per industry. A score reflects how a company compares with its industry peers, not with the whole market.
Companies above about $300 million in size, ranked by Marvin scores (0-100, relative to each company's own industry). The Communication Services sector, highest Business Quality score first; at most 4 per industry.
The stocks, one by one
Alphabet Inc. GOOGL
Alphabet combines revenue growth of 15.1% with a strong operating margin of 33.1% and return on equity of 38.1%. Its debt-to-equity ratio of 0.19 is low. One caution: its free cash flow margin of 11.9% is much smaller than its operating margin.
TKO Group Holdings, Inc. TKO
TKO posts an operating margin of 18.8%, but revenue growth was -3.1% in the last fiscal year, so sales shrank. Return on equity is 6.8% and debt-to-equity is 1.46, which is on the higher side. Free cash flow and gross margin figures are not available.
Anterix Inc. ATEX
Anterix shows revenue growth of 7.8%, return on equity of 23.0% and a free cash flow margin of 151.0%. Its operating margin of 1011.3% is unusually large, so check it against company filings. Debt-to-equity is not available.
Sirius XM Holdings Inc. SIRI
Sirius XM turns sales into profit well, with an operating margin of 19.1% and a free cash flow margin of 18.0%. Debt-to-equity is 0.79. The caution is that revenue growth was -1.6%, a slight decline, and return on equity is only 7.4%.
Alphabet Inc. GOOG
This is Alphabet's second listing, so its business figures match GOOGL: growth of 15.1%, operating margin of 33.1% and low debt-to-equity of 0.19. As with GOOGL, the free cash flow margin of 11.9% is noticeably lower than the operating margin.
The Trade Desk, Inc. TTD
The Trade Desk grew revenue 18.5% with a gross margin of 76.9% and a free cash flow margin of 28.9%, suggesting a profitable, fast-growing model. Operating margin is 19.6%. The caution is that a debt-to-equity figure is not available.
Netflix, Inc. NFLX
Netflix shows growth of 15.9%, an operating margin of 29.7% and a high return on equity of 45.3%, with moderate debt-to-equity of 0.55. The caution is that its opportunity score of 62 is much lower than its quality score of 93.
The New York Times Company NYT
The New York Times grew revenue 9.2%, with an operating margin of 16.0% and a free cash flow margin of 20.9%. Return on equity is 19.2%. The caution is that debt and gross margin figures are not available, and its opportunity score is only 60.
Meta Platforms, Inc. META
Meta Platforms grew revenue 22.2% and has a gross margin of 81.7% and an operating margin of 38.1%, signs of a very profitable business. Debt-to-equity is 0.43. One caution: free cash flow margin is 18.0%, well below its operating margin.
T-Mobile US, Inc. TMUS
T-Mobile US has steady growth of 8.5%, an operating margin of 19.8% and a free cash flow margin of 20.0%. Return on equity is 18.8%. The caution is that no debt-to-equity figure is available, which matters for a network business.
Formula One Group FWONA
Formula One Group grew revenue 22.7% and has a free cash flow margin of 19.0%. The caution is thinner profitability: operating margin is 11.9% and return on equity is just 5.4%. Its opportunity score of 40 is the lowest on this list.
NerdWallet, Inc. NRDS
NerdWallet has a very high gross margin of 93.5% and revenue growth of 21.7%. Free cash flow margin is 19.0% and return on equity is 20.0%. The caution is a modest operating margin of 10.2% and no debt-to-equity figure.
Omnicom Group Inc. OMC
Omnicom grew revenue 10.1% and has a free cash flow margin of 15.1%. The caution is thin profitability: operating margin is only 3.2%, gross margin is 9.5% and return on equity is 0.7%. A debt-to-equity figure is not available.
Verizon Communications Inc. VZ
Verizon grows slowly, at 2.5%, but earns an operating margin of 20.5% and a return on equity of 15.4%. The caution is debt: its debt-to-equity ratio of 1.79 is the highest on this list among stocks with that figure. No free cash flow figure is available.
The Walt Disney Company DIS
Disney has an operating margin of 18.4% and modest debt-to-equity of 0.42. The cautions are slow revenue growth of 3.4%, a free cash flow margin of 8.4% and a return on equity of 7.8%, all on the weaker side.
Common questions
Why do Alphabet and GOOG both appear on this list?
GOOGL and GOOG are two listings of Alphabet Inc., so they share the same business figures such as growth, margins and debt. Their scores differ slightly, which is why Marvin ranks them separately.
Does a high Business Quality score mean a stock is a good buy?
No. The score only describes how a company's business compares with other companies in its industry today. It does not say whether a stock's price is attractive or where it will go next.
Why are some figures missing for certain companies?
Not every company reports, or is measured on, every figure in a way Marvin can compare. A gross margin or debt ratio may be unavailable, so it is worth checking the company's own reports before drawing conclusions.
Keep reading
- Top 15 Communication Services Stocks by Marvin Score
- Top 15 Communication Services Stocks by Marvin Opportunity Score
- Top 15 Entertainment Stocks, Ranked by Marvin Scores
- Top 15 Internet Content & Information Stocks
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Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.