Critical Review: Telecom Italia (OTCMKTS:TIIAY) & Chunghwa Telecom (NYSE:CHT)

Telecom Italia (OTCMKTS:TIIAY) and Chunghwa Telecom (NYSE:CHT) are both large-cap utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

2.1% of Chunghwa Telecom shares are owned by institutional investors. 1.0% of Chunghwa Telecom shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Telecom Italia	0	3	1	1	2.60
Chunghwa Telecom	0	2	0	0	2.00

Volatility and Risk

Telecom Italia has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Chunghwa Telecom has a beta of 0.31, suggesting that its stock price is 69% less volatile than the S&P 500.

Dividends

Telecom Italia pays an annual dividend of $0.08 per share and has a dividend yield of 1.0%. Chunghwa Telecom pays an annual dividend of $1.30 per share and has a dividend yield of 3.0%. Chunghwa Telecom pays out 80.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Telecom Italia	N/A	N/A	N/A
Chunghwa Telecom	16.37%	9.85%	7.29%

Valuation & Earnings

This table compares Telecom Italia and Chunghwa Telecom”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Telecom Italia	$15.88 billion	1.08	-$660.08 million	N/A	N/A
Chunghwa Telecom	$234.75 billion	0.14	$1.23 billion	$1.61	26.78

Chunghwa Telecom has higher revenue and earnings than Telecom Italia.

Summary

Chunghwa Telecom beats Telecom Italia on 8 of the 14 factors compared between the two stocks.

About Telecom Italia

Telecom Italia S.p.A., together with its subsidiaries, engages in the provision of fixed and mobile telecommunications services in Italy and internationally. The company operates through Domestic, Brazil, and Other Operations segments. It offers fixed and mobile voice and Internet, and public telephony services, as well as products managed and developed for individuals and families; and voice, data, and Internet services and products, and information and communications technology solutions for top, public sector and large account customers. The company also manages and develops a portfolio of regulated and unregulated wholesale services for fixed-line and mobile telecommunications operators; and development, engineering, construction, and operation of network infrastructures, information technology (IT), and systems and properties. Telecom Italia S.p.A. was incorporated in 1908 and is based in Milan, Italy.

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.