Analyzing Telecom Italia (TI) and Orange (ORAN)

Telecom Italia (NYSE: TI) and Orange (NYSE:ORAN) are both large-cap telecommunications services companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, risk, earnings, dividends and institutional ownership.

Profitability

This table compares Telecom Italia and Orange’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Telecom Italia N/A N/A N/A
Orange N/A N/A N/A

Risk and Volatility

Telecom Italia has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500. Comparatively, Orange has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Earnings & Valuation

This table compares Telecom Italia and Orange’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telecom Italia $21.06 billion 0.92 $2.00 billion $0.68 13.35
Orange $45.29 billion 1.04 $3.25 billion $0.20 88.25

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

Analyst Ratings

This is a breakdown of current recommendations for Telecom Italia and Orange, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telecom Italia 0 2 1 0 2.33
Orange 1 1 3 0 2.40

Telecom Italia presently has a consensus price target of $1.80, indicating a potential downside of 80.18%. Given Telecom Italia’s higher probable upside, research analysts clearly believe Telecom Italia is more favorable than Orange.

Insider and Institutional Ownership

0.7% of Telecom Italia shares are held by institutional investors. Comparatively, 1.2% of Orange shares are held by institutional investors. 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.

Dividends

Orange pays an annual dividend of $0.52 per share and has a dividend yield of 2.9%. Telecom Italia does not pay a dividend. Orange pays out 260.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Orange beats Telecom Italia on 8 of the 12 factors compared between the two stocks.

About Telecom Italia

Telecom Italia S.p.A. (Telecom Italia) operates fixed voice and data infrastructure in Italy, and provides mobile network platforms. The Company focuses on various areas of digital services, including Enriched Communication, Trusted Digital Life, Business Life, Indoor Life, Mobile Open Life and Digital Entertainment. Its segments include Consumer, Business, National Wholesale and Other. It is engaged in developing various projects in areas, including Smart Green, Social Reading, Solutions for good schooling, Digital tourism 2.0, Smart Home, FriendTV and Big Data. Smart Green is the assessment of projects connected with the environment and potential partnerships with the local government offices for the monitoring of air in public offices and urban areas, using networks of sensors connected to the Company’s Cloud. The Company is involved, either alone or in partnership with external partners, in devising and developing healthcare services at national, regional and local level.

About Orange

Orange SA is a telecommunications operator. The Company also provides telecommunication services to multinational companies, under the brand Orange Business Services. The Company’s segments include France, Spain, Poland, Belgium and Luxembourg, Central European countries, Africa and Middle East, Enterprise, and International Carriers & Shared Services. The Company provides consumers, businesses and other telecommunications operators with a range of services, including fixed telephony and mobile telecommunications, data transmission and other value-added services, mainly in Europe, Africa and the Middle East. The Company offers fixed-line telephony, mobile telephony and Internet services in France. The Company offers fixed-line telephony, mobile telephony and Internet services in Spain. The Company offers fixed-line and mobile telephony, and Internet services in Poland. The Company operates through Mobistar and Groupama Banque SA.

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