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

Insider & Institutional Ownership

10.0% of Telefonica Brasil shares are held by institutional investors. Comparatively, 83.0% of CenturyLink shares are held by institutional investors. 0.6% of CenturyLink shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and price targets for Telefonica Brasil and CenturyLink, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonica Brasil 0 2 1 0 2.33
CenturyLink 3 6 4 0 2.08

Telefonica Brasil currently has a consensus price target of $15.00, suggesting a potential downside of 7.46%. CenturyLink has a consensus price target of $25.09, suggesting a potential upside of 25.33%. Given CenturyLink’s higher possible upside, analysts plainly believe CenturyLink is more favorable than Telefonica Brasil.

Profitability

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

Net Margins Return on Equity Return on Assets
Telefonica Brasil 9.41% 5.91% 3.97%
CenturyLink 2.20% 8.43% 2.36%

Earnings & Valuation

This table compares Telefonica Brasil and CenturyLink’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Telefonica Brasil $13.46 billion 2.03 $4.42 billion $0.74 21.91
CenturyLink $16.97 billion 0.65 $6.06 billion $0.69 29.01

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

Volatility and Risk

Telefonica Brasil has a beta of 1.36, meaning that its stock price is 36% more volatile than the S&P 500. Comparatively, CenturyLink has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500.

Dividends

Telefonica Brasil pays an annual dividend of $0.60 per share and has a dividend yield of 3.7%. CenturyLink pays an annual dividend of $2.16 per share and has a dividend yield of 10.8%. Telefonica Brasil pays out 81.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CenturyLink pays out 313.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CenturyLink has raised its dividend for 4 consecutive years. CenturyLink is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

CenturyLink beats Telefonica Brasil on 9 of the 17 factors compared between the two stocks.

About Telefonica Brasil

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.

About CenturyLink

CenturyLink, Inc. is an integrated communications company. The Company is engaged in providing an array of communications services to its residential and business customers. Its segments include business, which provides strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers, and consumer, which provides strategic and legacy products and services to residential customers. Its communications services include local and long-distance voice, broadband, Multi-Protocol Label Switching (MPLS), private line (including special access), Ethernet, colocation, hosting (including cloud hosting and managed hosting), data integration, video, network, public access, Voice over Internet Protocol (VoIP), information technology and other ancillary services. As of December 31, 2016, it served approximately 5.9 million broadband subscribers and 325,000 Prism TV subscribers.

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