Telefonica Brasil (NYSE: VIV) and Telecom Argentina Stet – France Telecom (NYSE:TEO) are both mid-cap integrated telecommunications services – nec companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, earnings, profitability, valuation and risk.
Volatility and Risk
Telefonica Brasil has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500. Comparatively, Telecom Argentina Stet – France Telecom has a beta of 1.48, indicating that its stock price is 48% more volatile than the S&P 500.
Telefonica Brasil pays an annual dividend of $0.60 per share and has a dividend yield of 4.1%. Telecom Argentina Stet – France Telecom does not pay a dividend. Telefonica Brasil pays out 76.9% 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 has raised its dividend for 4 consecutive years.
Valuation and Earnings
This table compares Telefonica Brasil and Telecom Argentina Stet – France Telecom’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Telefonica Brasil||$12.25 billion||2.02||$1.17 billion||$0.78||18.78|
|Telecom Argentina Stet – France Telecom||$3.62 billion||1.65||$269.10 million||$1.93||15.99|
Telefonica Brasil has higher revenue and earnings than Telecom Argentina Stet – France Telecom. Telecom Argentina Stet – France Telecom is trading at a lower price-to-earnings ratio than Telefonica Brasil, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
10.0% of Telefonica Brasil shares are owned by institutional investors. Comparatively, 5.3% of Telecom Argentina Stet – France Telecom shares are owned by institutional investors. 1.0% of Telecom Argentina Stet – France Telecom shares are owned by 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.
This table compares Telefonica Brasil and Telecom Argentina Stet – France Telecom’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Telecom Argentina Stet – France Telecom||9.99%||27.60%||12.02%|
This is a breakdown of current ratings and price targets for Telefonica Brasil and Telecom Argentina Stet – France Telecom, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Telecom Argentina Stet – France Telecom||0||1||1||0||2.50|
Telefonica Brasil presently has a consensus target price of $16.03, indicating a potential upside of 9.44%. Telecom Argentina Stet – France Telecom has a consensus target price of $29.00, indicating a potential downside of 6.03%. Given Telefonica Brasil’s higher probable upside, equities analysts clearly believe Telefonica Brasil is more favorable than Telecom Argentina Stet – France Telecom.
Telefonica Brasil beats Telecom Argentina Stet – France Telecom on 9 of the 16 factors compared between the two stocks.
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.
Telecom Argentina Stet – France Telecom Company Profile
Telecom Argentina S.A. provides fixed-line telecommunications services in Argentina, and also provides other telephone-related services, such as international long-distance service, data transmission, information technology solutions outsourcing and Internet services. The Company’s segments include Fixed Telecommunications Services (Fixed Services), Personal Mobile Telecommunications Services (Personal Mobile Services) and Nucleo Mobile Telecommunications Services (Nucleo Mobile Services). The Company, through its subsidiaries, also provides mobile telecommunications services and international wholesale services. The Fixed services segment consists of basic telephone services, interconnection services, data transmission and Internet services, information and communication technology services, and other telephone services. The Company, through its subsidiaries, such as Telecom Personal S.A. and Nucleo S.A., provides mobile services in Argentina and Paraguay, respectively.
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