BCE (NYSE:BCE) and Telefónica (NYSE:TEF) are both large-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, earnings, valuation, institutional ownership, profitability and analyst recommendations.
Institutional & Insider Ownership
45.0% of BCE shares are held by institutional investors. Comparatively, 0.9% of Telefónica shares are held by institutional investors. 0.2% of BCE shares are held by insiders. Comparatively, 0.0% of Telefónica shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Dividends
BCE pays an annual dividend of $2.62 per share and has a dividend yield of 6.1%. Telefónica pays an annual dividend of $0.34 per share and has a dividend yield of 7.8%. BCE pays out 99.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefónica pays out 46.6% of its earnings in the form of a dividend. BCE has raised its dividend for 1 consecutive years and Telefónica has raised its dividend for 1 consecutive years. Telefónica is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
BCE has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, Telefónica has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations and price targets for BCE and Telefónica, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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BCE | 1 | 6 | 2 | 0 | 2.11 |
Telefónica | 3 | 12 | 2 | 0 | 1.94 |
BCE presently has a consensus price target of $58.4375, indicating a potential upside of 36.66%. Telefónica has a consensus price target of $5.00, indicating a potential upside of 15.21%. Given BCE's stronger consensus rating and higher probable upside, equities analysts plainly believe BCE is more favorable than Telefónica.
Profitability
This table compares BCE and Telefónica's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
BCE | 10.21% | 16.12% | 4.61% |
Telefónica | 1.01% | 14.31% | 2.68% |
Valuation and Earnings
This table compares BCE and Telefónica's top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
BCE | $18.06 billion | 2.14 | $2.40 billion | $2.64 | 16.20 |
Telefónica | $54.24 billion | 0.42 | $1.28 billion | $0.73 | 5.95 |
BCE has higher earnings, but lower revenue than Telefónica. Telefónica is trading at a lower price-to-earnings ratio than BCE, indicating that it is currently the more affordable of the two stocks.
Summary
BCE beats Telefónica on 10 of the 15 factors compared between the two stocks.