Critical Analysis: TELUS (NYSE:TU) & Telstra (OTCMKTS:TLSYY)

Telstra (OTCMKTS:TLSYY) and TELUS (NYSE:TU) are both large-cap communication services companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, dividends, valuation, earnings and profitability.

Profitability

This table compares Telstra and TELUS’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Telstra	N/A	N/A	N/A
TELUS	-4.51%	8.01%	2.21%

Dividends

Telstra pays an annual dividend of $0.53 per share and has a dividend yield of 4.2%. TELUS pays an annual dividend of $0.52 per share and has a dividend yield of 5.4%. TELUS pays out -126.8% of its earnings in the form of a dividend. TELUS has increased its dividend for 5 consecutive years. TELUS 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 ratings and recommmendations for Telstra and TELUS, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Telstra	0	0	0	0	0.00
TELUS	4	9	3	0	1.94

TELUS has a consensus price target of $15.33, indicating a potential upside of 57.83%. Given TELUS’s stronger consensus rating and higher probable upside, analysts clearly believe TELUS is more favorable than Telstra.

Earnings and Valuation

This table compares Telstra and TELUS”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Telstra	$15.21 billion	1.90	$1.22 billion	N/A	N/A
TELUS	$20.21 billion	0.76	$796.57 million	($0.41)	-23.70

Telstra has higher earnings, but lower revenue than TELUS.

Insider and Institutional Ownership

49.4% of TELUS shares are owned by institutional investors. 0.1% of TELUS 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.

Risk & Volatility

Telstra has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, TELUS has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500.

Summary

TELUS beats Telstra on 11 of the 15 factors compared between the two stocks.

About Telstra

Telstra Corporation Limited provides telecommunications and information services to businesses, governments, and individuals in Australia and internationally. It operates in four segments: Telstra Consumer and Small Business, Telstra Enterprise, Networks and IT, and Telstra InfraCo. The company offers telecommunication, media and technology products and services in Australia using mobile and fixed network technologies, as well as operates call centers, retail stores, a dealership network, digital channels, distribution systems and Telstra Plus customer loyalty program. It also provides network capacity and management, unified communications, cloud, security, industry solutions, integrated and monitoring services to government and large enterprise and business customers; wholesale services, including voice and data; and telecommunication products and services to other carriers, carriage service providers, and internet service providers, as well as builds and manages digital platforms. In addition, the company operates the fixed passive network infrastructure, including data centers, exchanges, poles, ducts, pits and pipes, and fiber network; provides wholesale customers with access to network infrastructure; provides long-term access to components of infrastructure under the infrastructure services agreement; designs and constructs fiber, exchanges, and other infrastructure; and operates the passive and physical mobile tower assets owned or operated by the Amplitel Pty Ltd. The company was formerly known as Australian and Overseas Telecommunications Corporation Limited and changed its name to Telstra Corporation Limited in April 1993. Telstra Corporation Limited was founded in 1901 and is based in Melbourne, Australia.

About TELUS

TELUS Corporation, together with its subsidiaries, provides a range of telecommunications and information technology products and services in Canada. It operates through Technology Solutions and Digitally-Led Customer Experiences segments. The Technology Solutions segment offers a range of telecommunications products and services; network services; healthcare services; mobile technologies equipment; data services, such as internet protocol; television; hosting, managed information technology, and cloud-based services; software, data management, and data analytics-driven smart food-chain and consumer goods technologies; home and business security; healthcare software and technology solutions; and voice and other telecommunications services, as well as mobile and fixed voice and data telecommunications services and products. The Digitally-Led Customer Experiences segment provides digital customer experience and digital-enablement transformation solutions, including artificial intelligence and content management solutions. The company was formerly known as TELUS Communications Inc. and changed its name to TELUS Corporation in February 2005. TELUS Corporation was incorporated in 1998 and is based in Vancouver, Canada.