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

Risk and Volatility

TELUS has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 1.35, meaning that its share price is 35% more volatile than the S&P 500.

Dividends

TELUS pays an annual dividend of $1.58 per share and has a dividend yield of 4.2%. Telefonica Brasil pays an annual dividend of $0.60 per share and has a dividend yield of 4.0%. TELUS pays out 97.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefonica Brasil pays out 75.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefonica Brasil has raised its dividend for 4 consecutive years.

Insider & Institutional Ownership

52.2% of TELUS shares are held by institutional investors. Comparatively, 9.5% of Telefonica Brasil shares are held by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares TELUS and Telefonica Brasil’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TELUS 9.61% 18.72% 5.38%
Telefonica Brasil 10.00% 6.29% 4.23%

Analyst Ratings

This is a breakdown of current recommendations for TELUS and Telefonica Brasil, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TELUS 0 2 7 0 2.78
Telefonica Brasil 0 2 1 0 2.33

TELUS currently has a consensus price target of $46.17, suggesting a potential upside of 23.44%. Telefonica Brasil has a consensus price target of $16.03, suggesting a potential upside of 5.76%. Given TELUS’s stronger consensus rating and higher possible upside, research analysts clearly believe TELUS is more favorable than Telefonica Brasil.

Earnings and Valuation

This table compares TELUS and Telefonica Brasil’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TELUS $9.66 billion 2.30 $923.60 million $1.62 23.09
Telefonica Brasil $12.25 billion 2.09 $1.17 billion $0.80 18.95

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

Summary

TELUS beats Telefonica Brasil on 9 of the 16 factors compared between the two stocks.

About TELUS

TELUS Corporation (TELUS) is a telecommunications company. The Company provides a range of telecommunications services and products, including wireless and wireline voice and data. Its data services include Internet protocol (IP), television (TV), hosting, managed information technology and cloud-based services, and certain healthcare solutions. The Company operates through two business segments: Wireless segment and Wireline segment. Its wireless and wireline businesses are primarily operated through TELUS Communications Company (TCC). The Company offers business services, including healthcare, across wireless and wireline are supported through TELUS sales representatives, product specialists, independent dealers and online self-serve applications for small and medium-sized businesses (SMBs). Its business process outsourcing services are supported through sales representatives and client relationship management teams.

About Telefonica Brasil

Telefonica Brasil S.A. is a mobile telecommunications company in Brazil offering postpaid mobile services. The Company also operates as a fixed telecommunications company in the state of Sao Paulo. The Company markets its mobile services under its Vivo brand. It offers its clients a portfolio of products, including mobile and fixed voice, mobile data, fixed broadband, ultra-fast broadband, Pay television, information technology and digital services. Its operations consist of local and long distance fixed telephone services; mobile services, including value-added services; data services, including broadband services and mobile data services; Pay television services through direct to home (DTH), Internet protocol television (IPTV) and cable; network services, such as rental of facilities, as well as other services; wholesale services, including interconnection; digital services; services designed specifically for corporate customers, and the sale of wireless devices and accessories.

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