Comparing BCE (BCE) and TIM Participacoes (TSU)

BCE (NYSE: BCE) and TIM Participacoes (NYSE:TSU) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Risk & Volatility

BCE has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500. Comparatively, TIM Participacoes has a beta of 1.32, meaning that its stock price is 32% more volatile than the S&P 500.

Profitability

This table compares BCE and TIM Participacoes’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BCE 12.06% 19.24% 5.46%
TIM Participacoes 8.20% 7.45% 4.16%

Insider & Institutional Ownership

43.5% of BCE shares are owned by institutional investors. Comparatively, 15.5% of TIM Participacoes shares are owned by institutional investors. 0.2% of BCE shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for BCE and TIM Participacoes, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BCE 0 4 3 0 2.43
TIM Participacoes 0 5 4 0 2.44

BCE presently has a consensus target price of $57.00, suggesting a potential upside of 37.45%. TIM Participacoes has a consensus target price of $21.00, suggesting a potential upside of 23.24%. Given BCE’s higher probable upside, equities analysts clearly believe BCE is more favorable than TIM Participacoes.

Valuation and Earnings

This table compares BCE and TIM Participacoes’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BCE $17.52 billion 2.13 $2.25 billion $2.62 15.83
TIM Participacoes $3.21 billion 2.57 $386.64 million $0.80 21.30

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

Dividends

BCE pays an annual dividend of $2.32 per share and has a dividend yield of 5.6%. TIM Participacoes pays an annual dividend of $0.08 per share and has a dividend yield of 0.5%. BCE pays out 88.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TIM Participacoes pays out 10.0% of its earnings in the form of a dividend.

Summary

BCE beats TIM Participacoes on 10 of the 16 factors compared between the two stocks.

BCE Company Profile

BCE Inc., a telecommunications and media company, provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. The company operates through three segments: Bell Wireless, Bell Wireline, and Bell Media. The Bell Wireless segment offers integrated digital wireless voice and data communications products and services. The Bell Wireline segment provides data, including Internet access, Internet protocol TV and telephony, local telephone, and long distance, as well as other communications services and products; and satellite TV and connectivity services. This segment also offers home security and monitoring services; competitive local exchange carrier services; business service solutions, such as hosting and cloud, managed, professional, and infrastructure services; virtual private networks, point-to-point data networks, and international network solutions; and Web and audio conferencing, and email solutions. The Bell Media segment offers conventional, specialty, and pay TV; and digital media, radio broadcasting, and out-of-home advertising services, as well as sports and other event production and broadcasting services. This segment owns and operates approximately 30 conventional TV stations; 34 specialty and 4 pay TV channels; 105 licensed radio stations; 31,000 advertising faces; and 200 Websites and approximately 30 apps. The company also distributes mobile products. BCE Inc. offers its services through a network of corporate and dealer-owned retail stores, national retailers, and call center representatives, as well as Websites and door-to-door sales representatives. The company was formerly known as Bell Canada Enterprises Inc. BCE Inc. was founded in 1880 and is headquartered in Verdun, Canada.

TIM Participacoes Company Profile

TIM Participações S.A. provides telecommunication services in Brazil. The company offers mobile voice and data, broadband Internet access, value-added, and other telecommunications services and products. It provides prepaid and postpaid services; value-added services, including short message services or text messaging, and multimedia messaging services; and insurance services. The company also sells various mobile handsets and accessories through its dealer network, which includes its own stores, exclusive franchises, and authorized dealers; and offers co-billing services to other telecommunication service providers. As of December 31, 2016, it served a subscriber base of 58.6 million customers; and had approximately 12.2 thousand points of sales, including 156 company owned stores, as well as had approximately 310 thousand points of sales to access prepaid phone services through supermarkets, newsstands, and other small retailers. The company was formerly known as Tele Celular Sul Participações S.A. and changed its name to TIM Participações S.A. in August 2004. The company was founded in 1998 and is headquartered in Rio de Janeiro, Brazil. TIM Participações S.A. is a subsidiary of TIM Brasil Serviços e Participações S.A.

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