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

Insider & Institutional Ownership

42.7% of BCE shares are held by institutional investors. Comparatively, 10.0% of Telefonica Brasil shares are held by institutional investors. 0.2% of BCE shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BCE $18.26 billion 2.32 $6.84 billion $2.44 19.28
Telefonica Brasil $13.46 billion 2.04 $4.42 billion $0.74 21.96

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

Profitability

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

Net Margins Return on Equity Return on Assets
BCE 12.85% 21.08% 5.78%
Telefonica Brasil 9.41% 5.91% 3.97%

Analyst Recommendations

This is a breakdown of current ratings and price targets for BCE and Telefonica Brasil, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BCE 0 5 4 0 2.44
Telefonica Brasil 0 2 1 0 2.33

BCE presently has a consensus price target of $57.80, suggesting a potential upside of 22.85%. Telefonica Brasil has a consensus price target of $15.00, suggesting a potential downside of 7.69%. Given BCE’s stronger consensus rating and higher probable upside, research analysts clearly believe BCE is more favorable than Telefonica Brasil.

Volatility and Risk

BCE has a beta of 0.35, indicating that its share price is 65% less volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.

Dividends

BCE pays an annual dividend of $2.28 per share and has a dividend yield of 4.8%. Telefonica Brasil pays an annual dividend of $0.60 per share and has a dividend yield of 3.7%. BCE pays out 93.4% 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 81.1% 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.

Summary

BCE beats Telefonica Brasil on 13 of the 17 factors compared between the two stocks.

About BCE

BCE Inc. is a communications company. The Company’s segments include Bell Wireless, Bell Wireline and Bell Media. Its Bell Wireless segment provides wireless voice and data communications products and services to its residential, small and medium-sized business and large enterprise customers across Canada. Its Bell Wireline segment provides data, including Internet access and Internet protocol television (IPTV), local telephone, long distance, as well as other communications services and products to its residential, small and medium-sized business and large enterprise customers, primarily in Ontario, Quebec and the Atlantic provinces, while Satellite television (TV) service and connectivity to business customers are available nationally across Canada. Its Bell Media segment provides conventional, specialty and pay Television, digital media, and radio broadcasting services and out of home (OOH) advertising services to customers across Canada.

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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