Financial Review: Telefonica (NYSE:TEF) vs. Chunghwa Telecom (NYSE:CHT)

Chunghwa Telecom (NYSE:CHT) and Telefonica (NYSE:TEF) are both large-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, dividends, earnings, institutional ownership and profitability.

Risk & Volatility

Chunghwa Telecom has a beta of 0.29, suggesting that its share price is 71% less volatile than the S&P 500. Comparatively, Telefonica has a beta of 0.29, suggesting that its share price is 71% less volatile than the S&P 500.

Earnings & Valuation

This table compares Chunghwa Telecom and Telefonica”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chunghwa Telecom	$7.58 billion	4.42	$1.23 billion	$1.64	26.32
Telefonica	$40.55 billion	0.53	-$53.02 million	($0.41)	-9.29

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

Institutional & Insider Ownership

2.1% of Chunghwa Telecom shares are held by institutional investors. Comparatively, 1.1% of Telefonica shares are held by institutional investors. 1.0% of Chunghwa Telecom shares are held by insiders. Comparatively, 0.0% of Telefonica shares are held 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.

Dividends

Chunghwa Telecom pays an annual dividend of $1.30 per share and has a dividend yield of 3.0%. Telefonica pays an annual dividend of $0.25 per share and has a dividend yield of 6.6%. Chunghwa Telecom pays out 79.3% 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 pays out -61.0% of its earnings in the form of a dividend. Telefonica is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations for Chunghwa Telecom and Telefonica, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chunghwa Telecom	0	2	0	0	2.00
Telefonica	5	3	0	0	1.38

Telefonica has a consensus target price of $4.02, indicating a potential upside of 5.38%. Given Telefonica’s higher possible upside, analysts plainly believe Telefonica is more favorable than Chunghwa Telecom.

Profitability

This table compares Chunghwa Telecom and Telefonica’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chunghwa Telecom	16.23%	9.96%	7.31%
Telefonica	-5.23%	8.54%	1.96%

Summary

Chunghwa Telecom beats Telefonica on 10 of the 14 factors compared between the two stocks.

About Chunghwa Telecom

Chunghwa Telecom Co., Ltd., together with its subsidiaries, provides telecommunication services in Taiwan and internationally. It operates through Consumer Business, Enterprise Business, International Business, and Others segments. The company offers local, domestic long distance, and international long distance fixed-line telephone services; mobile services such as prepaid and postpaid plans; broadband plans; and internet and data services. Chunghwa Telecom Co., Ltd. was incorporated in 1996 and is headquartered in Taipei City, Taiwan.

About Telefonica

Telefónica, S.A., together with its subsidiaries, provides telecommunications services in Europe and Latin America. The company offers mobile and related services and products, such as mobile voice, value added, mobile data and internet, wholesale, corporate, roaming, fixed wireless, and trunking and paging services. It also provides fixed telecommunication services, including PSTN lines; ISDN accesses; public telephone services; local, domestic, and international long-distance and fixed-to-mobile communications; corporate communications; supplementary value-added services; video telephony; intelligent network; and telephony information services, as well as leases and sells handset equipment and telephony information services. It also provides Internet and broadband multimedia services comprising internet service provider, portal and network, retail and wholesale broadband access, narrowband switched access, security, internet through fibre to the home, and voice over internet protocol services. In addition, the company offers leased line, virtual private network, fibre optics, web hosting and application, managed hosting, content delivery, outsourcing and application, desktop, and system integration and professional services. Further, the company offers wholesale services for telecommunication operators, including domestic interconnection and international wholesale services; leased lines for other operators; and local loop leasing services, as well as bit stream services, wholesale line rental accesses, and leased ducts for other operators' fiber deployment. Additionally, it provides video/TV services; smart connectivity and services, and consumer IoT products; financial and other payment, security, cloud, advertising, big data, and digital experience services; Aura; open gateway, living apps; smart Wi-Fi, Phoenix, NT, Solar 360, and Movistar Home devices. Telefónica, S.A. was incorporated in 1924 and is headquartered in Madrid, Spain.