Telefonica SA (NYSE: TEF) and Telefonica Brasil (NYSE:VIV) are both large-cap utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Profitability

This table compares Telefonica SA and Telefonica Brasil’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Telefonica SA 5.18% 29.02% 6.53%
Telefonica Brasil 9.41% 5.91% 3.97%

Volatility & Risk

Telefonica SA has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.

Insider & Institutional Ownership

0.9% of Telefonica SA shares are owned by institutional investors. Comparatively, 11.0% of Telefonica Brasil shares are owned by institutional investors. 0.0% of Telefonica SA shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Telefonica SA pays an annual dividend of $0.51 per share and has a dividend yield of 4.7%. Telefonica Brasil pays an annual dividend of $0.65 per share and has a dividend yield of 4.2%. Telefonica SA pays out 96.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefonica Brasil pays out 87.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefonica SA has increased its dividend for 4 consecutive years. Telefonica SA is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Telefonica SA and Telefonica Brasil, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonica SA 2 4 7 0 2.38
Telefonica Brasil 0 2 1 0 2.33

Telefonica SA presently has a consensus target price of $10.51, suggesting a potential downside of 2.21%. Telefonica Brasil has a consensus target price of $15.00, suggesting a potential downside of 3.04%. Given Telefonica SA’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Telefonica SA is more favorable than Telefonica Brasil.

Valuation and Earnings

This table compares Telefonica SA and Telefonica Brasil’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Telefonica SA $63.21 billion 0.87 $19.76 billion $0.53 20.28
Telefonica Brasil $13.57 billion 1.93 $4.46 billion $0.74 20.91

Telefonica SA has higher revenue and earnings than Telefonica Brasil. Telefonica SA is trading at a lower price-to-earnings ratio than Telefonica Brasil, indicating that it is currently the more affordable of the two stocks.

Summary

Telefonica SA beats Telefonica Brasil on 10 of the 16 factors compared between the two stocks.

Telefonica SA Company Profile

Telefonica, S.A. is an integrated and diversified telecommunications group operating in Europe and Latin America. The Company’s services and products include Mobile business, Fixed-line telephony business and Digital services. Its segments include Telefonica Spain, Telefonica Brazil, Telefonica Germany, Telefonica United Kingdom and Telefonica Hispanoamerica (formed by the Company’s operators in Argentina, Chile, Peru, Colombia, Mexico, Venezuela and Central America, Ecuador and Uruguay). These segments are engaged in activities relating to wireline, wireless, cable, data, Internet and television (TV) businesses and other digital services in accordance with each location. It offers a range of mobile and related services and products to personal and business customers. It offers traditional fixed telecommunication services, Internet and broadband multimedia services and data and business-solutions services. It offers a range of digital services, such as Internet of Things (IoT).

Telefonica Brasil Company Profile

Telefonica Brasil S.A. is a mobile telecommunications company in Brazil offering postpaid mobile services. The Company also operates as a fixed telecommunications company in the state of Sao Paulo. The Company markets its mobile services under its Vivo brand. It offers its clients a portfolio of products, including mobile and fixed voice, mobile data, fixed broadband, ultra-fast broadband, Pay television, information technology and digital services. Its operations consist of local and long distance fixed telephone services; mobile services, including value-added services; data services, including broadband services and mobile data services; Pay television services through direct to home (DTH), Internet protocol television (IPTV) and cable; network services, such as rental of facilities, as well as other services; wholesale services, including interconnection; digital services; services designed specifically for corporate customers, and the sale of wireless devices and accessories.

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