Critical Analysis: Rogers Communication (NYSE:RCI) versus Verizon Communications (NYSE:VZ)

Verizon Communications (NYSE:VZ) and Rogers Communication (NYSE:RCI) are both large-cap communication services companies, but which is the better investment? We will compare the two companies based on the strength of their risk, dividends, earnings, profitability, valuation, analyst recommendations and institutional ownership.

Dividends

Verizon Communications pays an annual dividend of $2.83 per share and has a dividend yield of 5.6%. Rogers Communication pays an annual dividend of $1.45 per share and has a dividend yield of 3.9%. Verizon Communications pays out 73.7% of its earnings in the form of a dividend. Rogers Communication pays out 17.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Verizon Communications has raised its dividend for 20 consecutive years. Verizon Communications is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Verizon Communications and Rogers Communication, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Verizon Communications	0	12	8	0	2.40
Rogers Communication	1	3	5	0	2.44

Verizon Communications currently has a consensus price target of $50.97, suggesting a potential upside of 1.63%. Rogers Communication has a consensus price target of $36.00, suggesting a potential downside of 4.00%. Given Verizon Communications’ higher probable upside, equities analysts plainly believe Verizon Communications is more favorable than Rogers Communication.

Institutional & Insider Ownership

62.1% of Verizon Communications shares are owned by institutional investors. Comparatively, 45.5% of Rogers Communication shares are owned by institutional investors. 0.0% of Verizon Communications shares are owned by company insiders. Comparatively, 29.0% of Rogers Communication shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Verizon Communications has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500. Comparatively, Rogers Communication has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500.

Profitability

This table compares Verizon Communications and Rogers Communication’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Verizon Communications	11.64%	19.48%	5.07%
Rogers Communication	27.54%	11.56%	3.05%

Earnings & Valuation

This table compares Verizon Communications and Rogers Communication”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Verizon Communications	$138.19 billion	1.51	$17.17 billion	$3.84	13.06
Rogers Communication	$15.54 billion	1.30	$4.93 billion	$8.28	4.53

Verizon Communications has higher revenue and earnings than Rogers Communication. Rogers Communication is trading at a lower price-to-earnings ratio than Verizon Communications, indicating that it is currently the more affordable of the two stocks.

Summary

Verizon Communications beats Rogers Communication on 11 of the 17 factors compared between the two stocks.

About Verizon Communications

Verizon Communications Inc., through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. It operates in two segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business). The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements; and fixed wireless access (FWA) broadband through its wireless networks, as well as related equipment and devices, such as smartphones, tablets, smart watches, and other wireless-enabled connected devices. The segment also offers wireline services in the Mid-Atlantic and Northeastern United States, as well as Washington D.C. through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network. The Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and conferencing, corporate networking, security and managed network, local and long-distance voice, and network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was incorporated in 1983 and is headquartered in New York, New York.

About Rogers Communication

Rogers Communications Inc. operates as a communications and media company in Canada. It operates through three segments: Wireless, Cable, and Media. The company offers mobile Internet access, wireless voice and enhanced voice, device financing, device protection, global voice and data roaming, wireless home phone, bridging landline, machine-to-machine and Internet of Things solutions, and advanced wireless solutions for businesses, as well as device shipping and express pickup services; and postpaid and prepaid services under the Rogers, Fido, and chatr brands. It also provides internet and WiFi services; and monitoring, security, automation, energy efficiency, and smart control through smartphone app. In addition, the company offers local and network TV; on-demand television; cloud-based digital video recorders; voice-activated remote controls, and integrated apps; personal video recorders; linear and time-shifted programming; digital specialty channels; and 4K television programming. Further, it provides residential and small business local telephony services; voicemail, call waiting, and long distance; voice, data networking, Internet protocol (IP), and Ethernet services; private networking, Internet, IP voice, and cloud solutions; optical wave and multi-protocol label switching services; information technology and network technologies; cable access network services; telecommunications technical consulting services; and season games through television, smartphones, tablets, personal computers, and other streaming devices, as well as operates Ignite TV and Ignite TV app. Additionally, the company owns Toronto Blue Jays and the Rogers Centre event venue; and operates Sportsnet ONE, Sportsnet 360, Sportsnet World, Citytv, OMNI, FX (Canada), FXX (Canada), and OLN television networks, as well as 52 AM and FM radio stations. It also offers Rogers and the Rogers World Elite Mastercard. The company was founded in 1960 and is headquartered in Toronto, Canada.