Contrasting BT Group (BT) & Swisscom (SCMWY)

BT Group (NYSE: BT) and Swisscom (OTCMKTS:SCMWY) are both large-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for BT Group and Swisscom, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BT Group 1 10 5 0 2.25
Swisscom 1 1 0 0 1.50

BT Group presently has a consensus target price of $302.22, suggesting a potential upside of 1,990.06%. Given BT Group’s stronger consensus rating and higher possible upside, analysts plainly believe BT Group is more favorable than Swisscom.

Risk and Volatility

BT Group has a beta of 0.91, indicating that its share price is 9% less volatile than the S&P 500. Comparatively, Swisscom has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Profitability

This table compares BT Group and Swisscom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BT Group 8.64% 32.72% 6.43%
Swisscom 13.48% 22.35% 7.30%

Earnings and Valuation

This table compares BT Group and Swisscom’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BT Group $31.46 billion 0.91 $2.70 billion $1.85 7.82
Swisscom $11.85 billion 2.03 $1.60 billion $3.08 15.05

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

Institutional and Insider Ownership

0.9% of BT Group shares are held by institutional investors. Comparatively, 0.1% of Swisscom shares are held by institutional investors. 1.0% of Swisscom shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

BT Group pays an annual dividend of $1.38 per share and has a dividend yield of 9.5%. Swisscom pays an annual dividend of $1.47 per share and has a dividend yield of 3.2%. BT Group pays out 74.6% of its earnings in the form of a dividend. Swisscom pays out 47.7% 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. BT Group has raised its dividend for 6 consecutive years. BT Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

BT Group beats Swisscom on 10 of the 17 factors compared between the two stocks.

About BT Group

BT Group plc provides communications services worldwide. Its Consumer segment sells telephones, baby monitors, and Wi-Fi extenders through high street retailers, online BT Shop, and Website BT.com; and offers home phone, copper and fiber broadband, TV, and mobile services in various packages. The company's EE segment offers 2G, 3G, and 4G mobile network services; broadband, fixed-voice, and TV services; and postpaid and prepaid plans, and emergency services network. This segment also sells 4G mobile phones, tablets, connected devices, and mobile broadband devices from various manufacturers. Its Business and Public Sector segment provides fixed voice, mobility, fiber and connectivity, and networked IT services to retailers, utilities, public sector, healthcare, sports, construction, finance, and educational sectors. The company's Global Services segment offers business communications and ICT services comprising BT Connect, BT Security, BT One, BT Contact, BT Compute, BT Advise, and BT for financial markets. This segment serves approximately 5,500 customers in 180 countries. Its Wholesale and Ventures segment enables communications providers and other organizations to provide fixed or mobile phone services. Its ventures provide mass-market services, such as directory enquiries and payphones; and enterprise services comprising BT Fleet and BT Redcare. This segment also provides broadband and Ethernet, voice, hosted communication, mobile virtual network operator, managed solutions, machine-to-machine, roaming, and media services. The company's Openreach segment engages in the provision of services over the local access network; and installation and maintenance of fiber and copper communications networks that connect homes and businesses. The company was formerly known as Newgate Telecommunications Limited and changed its name to BT Group plc in September 2001. BT Group plc was incorporated in 2001 and is headquartered in London, the United Kingdom.

About Swisscom

Swisscom AG provides telecommunication services primarily in Switzerland and Italy. The company operates through three segments: Swisscom Switzerland, Fastweb, and Other Operating. It offers broadband, TV, fixed-network, and mobile phone subscription services, as well as national and international telephone, and data traffic services for residential customers, and small and medium-sized enterprises. The company also provides cloud, outsourcing, workplace, UCC, mobile phone, networking, business process optimization, SAP, Internet of Things, security and authentication, digital consulting, and software development solutions primarily for banking, hospital, and health insurance industries; fixed and mobile networks by other telecommunication service providers; and roaming to foreign operators whose customers use its mobile networks, as well as broadband services and regulated products. In addition, it plans, operates, and maintains network infrastructure and related information technology (IT) systems; provides support functions to finance, human resource, and strategy, as well as management of real estate and vehicle fleet; and offers broadband services, such as voice, data, and TV services, as well as video-on-demand for residential and corporate customers. Further, the company provides mobile phone services; IT and network services, and customized solutions; and online and telephone directories, as well as sells merchandise products. Additionally, it offers collection services for radio and TV license fees; radio and cross platform services for customers in the media field; and securitized radio transmissions services, as well as constructs and maintains wired and wireless networks. Swisscom AG was founded in 1998 and is headquartered in Worblaufen, Switzerland.

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