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

Institutional & Insider Ownership

0.9% of Telefonica SA shares are owned by institutional investors. Comparatively, 1.0% of BT Group PLC shares are owned by institutional investors. 0.0% of Telefonica SA shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Telefonica SA and BT Group PLC, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonica SA 2 4 7 0 2.38
BT Group PLC 3 8 7 0 2.22

Telefonica SA currently has a consensus price target of $10.83, suggesting a potential upside of 0.12%. BT Group PLC has a consensus price target of $352.35, suggesting a potential upside of 1,795.39%. Given BT Group PLC’s higher probable upside, analysts clearly believe BT Group PLC is more favorable than Telefonica SA.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Telefonica SA $64.58 billion 0.86 $20.19 billion $0.53 20.42
BT Group PLC $31.83 billion 1.16 $9.05 billion $1.04 17.88

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

Dividends

Telefonica SA pays an annual dividend of $0.51 per share and has a dividend yield of 4.7%. BT Group PLC pays an annual dividend of $0.95 per share and has a dividend yield of 5.1%. 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. BT Group PLC pays out 91.3% 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 raised its dividend for 5 consecutive years. BT Group PLC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Telefonica SA and BT Group PLC’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%
BT Group PLC 7.14% 39.24% 6.77%

Volatility and Risk

Telefonica SA has a beta of 1.31, indicating that its share price is 31% more volatile than the S&P 500. Comparatively, BT Group PLC has a beta of 1.04, indicating that its share price is 4% more volatile than the S&P 500.

Summary

BT Group PLC beats Telefonica SA 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).

BT Group PLC Company Profile

BT Group plc is a communications services company. The Company is engaged in selling fixed-voice services, broadband, mobile and television products and services, as well as managed networked information technology (IT) solutions and cyber security protection. Its segments include Consumer, which provides fixed-voice, broadband, TV and mobile services; EE, which is a mobile network operator in the United Kingdom and provides mobile and fixed communications services to consumers; Business and Public Sector, which provides communications and IT services to businesses and the public sector in the United Kingdom and the Republic of Ireland (RoI) ;Global Services, which provides managed networked IT services to corporate customers; Wholesale and Ventures, which provides fixed and mobile services to communications providers (CPs); and Openreach, which provides copper and fiber connections between its exchanges and homes and businesses.

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