América Móvil (NYSE:AMX) and Telefónica (NYSE:TEF) are both large-cap computer and technology companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, profitability, risk and analyst recommendations.
Dividends
América Móvil pays an annual dividend of $0.37 per share and has a dividend yield of 2.9%. Telefónica pays an annual dividend of $0.34 per share and has a dividend yield of 7.8%. América Móvil pays out 34.9% of its earnings in the form of a dividend. Telefónica pays out 46.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Telefónica has increased its dividend for 1 consecutive years. Telefónica is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
7.4% of América Móvil shares are held by institutional investors. Comparatively, 0.9% of Telefónica shares are held by institutional investors. 1.0% of América Móvil shares are held by insiders. Comparatively, 0.0% of Telefónica shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Profitability
This table compares América Móvil and Telefónica's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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América Móvil | 2.73% | 12.08% | 1.65% |
Telefónica | 1.01% | 14.31% | 2.68% |
Valuation and Earnings
This table compares América Móvil and Telefónica's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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América Móvil | $52.35 billion | 0.79 | $3.59 billion | $1.06 | 11.98 |
Telefónica | $54.24 billion | 0.42 | $1.28 billion | $0.73 | 5.95 |
América Móvil has higher earnings, but lower revenue than Telefónica. Telefónica is trading at a lower price-to-earnings ratio than América Móvil, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent recommendations and price targets for América Móvil and Telefónica, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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América Móvil | 0 | 3 | 4 | 0 | 2.57 |
Telefónica | 3 | 12 | 2 | 0 | 1.94 |
América Móvil currently has a consensus price target of $12.1667, indicating a potential downside of 4.20%. Telefónica has a consensus price target of $5.00, indicating a potential upside of 15.21%. Given Telefónica's higher possible upside, analysts plainly believe Telefónica is more favorable than América Móvil.
Volatility & Risk
América Móvil has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, Telefónica has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500.
Summary
América Móvil beats Telefónica on 9 of the 17 factors compared between the two stocks.