Telefonica (NYSE: TEF) and Verizon Communications (NYSE:VZ) are both large-cap telecommunications services companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.
Telefonica pays an annual dividend of $0.35 per share and has a dividend yield of 3.5%. Verizon Communications pays an annual dividend of $2.36 per share and has a dividend yield of 4.6%. Telefonica pays out 70.0% of its earnings in the form of a dividend. Verizon Communications pays out 60.5% 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 11 consecutive years. Verizon Communications is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Telefonica and Verizon Communications’ gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Telefonica||$57.59 billion||0.87||$2.62 billion||$0.50||19.88|
|Verizon Communications||$125.98 billion||1.67||$13.13 billion||$3.90||13.23|
Verizon Communications has higher revenue and earnings than Telefonica. Verizon Communications is trading at a lower price-to-earnings ratio than Telefonica, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and target prices for Telefonica and Verizon Communications, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Telefonica currently has a consensus price target of $11.40, indicating a potential upside of 14.69%. Verizon Communications has a consensus price target of $51.57, indicating a potential downside of 0.08%. Given Telefonica’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Telefonica is more favorable than Verizon Communications.
Insider & Institutional Ownership
0.9% of Telefonica shares are held by institutional investors. Comparatively, 63.2% of Verizon Communications shares are held by institutional investors. 0.0% of Telefonica shares are held by insiders. Comparatively, 0.1% of Verizon Communications shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This table compares Telefonica and Verizon Communications’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
Telefonica has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, Verizon Communications has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.
Verizon Communications beats Telefonica on 12 of the 17 factors compared between the two stocks.
Telefonica 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).
Verizon Communications Company Profile
Verizon Communications Inc. is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales, to consumer, business and government customers across the United States. The Wireline segment offers voice, data and video communications products and services, such as broadband video, data center and cloud services, security and managed network services, and local and long distance voice services. The Company has combined Yahoo! Inc.’s operating assets with its existing AOL Inc. business to create a new subsidiary, Oath Inc., owns a diverse house of more than 50 media and technology brands. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, Yahoo Finance and Yahoo Mail.
Receive News & Ratings for Telefonica Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Telefonica and related companies with MarketBeat.com's FREE daily email newsletter.