Telefonica SA (NYSE: TEF) and Telecom Italia S.P.A. (NYSE:TI) are both large-cap utilities companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Institutional and Insider Ownership

0.9% of Telefonica SA shares are held by institutional investors. Comparatively, 0.8% of Telecom Italia S.P.A. shares are held by institutional investors. 0.0% of Telefonica SA shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Telefonica SA and Telecom Italia S.P.A.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Telefonica SA 5.18% 29.02% 6.53%
Telecom Italia S.P.A. N/A N/A N/A

Dividends

Telefonica SA pays an annual dividend of $0.51 per share and has a dividend yield of 4.8%. Telecom Italia S.P.A. does not pay a dividend. Telefonica SA pays out 96.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares Telefonica SA and Telecom Italia S.P.A.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Telefonica SA $64.58 billion 0.84 $20.19 billion $0.53 19.92
Telecom Italia S.P.A. $23.67 billion 0.81 $10.20 billion N/A N/A

Telefonica SA has higher revenue and earnings than Telecom Italia S.P.A..

Analyst Ratings

This is a summary of current recommendations for Telefonica SA and Telecom Italia S.P.A., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonica SA 2 4 7 0 2.38
Telecom Italia S.P.A. 0 4 1 0 2.20

Telefonica SA currently has a consensus target price of $10.83, suggesting a potential upside of 2.59%. Given Telefonica SA’s stronger consensus rating and higher possible upside, equities analysts plainly believe Telefonica SA is more favorable than Telecom Italia S.P.A..

Risk and Volatility

Telefonica SA has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, Telecom Italia S.P.A. has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500.

Summary

Telefonica SA beats Telecom Italia S.P.A. on 13 of the 14 factors compared between the two stocks.

Telefonica SA Company Profile

Telefonica, S.A. is an integrated and diversified telecommunications group operating in Europe and Latin America. The Company’s services and products include Mobile business, Fixed-line telephony business and Digital services. Its segments include Telefonica Spain, Telefonica Brazil, Telefonica Germany, Telefonica United Kingdom and Telefonica Hispanoamerica (formed by the Company’s operators in Argentina, Chile, Peru, Colombia, Mexico, Venezuela and Central America, Ecuador and Uruguay). These segments are engaged in activities relating to wireline, wireless, cable, data, Internet and television (TV) businesses and other digital services in accordance with each location. It offers a range of mobile and related services and products to personal and business customers. It offers traditional fixed telecommunication services, Internet and broadband multimedia services and data and business-solutions services. It offers a range of digital services, such as Internet of Things (IoT).

Telecom Italia S.P.A. Company Profile

Telecom Italia S.p.A. (Telecom Italia) operates fixed voice and data infrastructure in Italy, and provides mobile network platforms. The Company focuses on various areas of digital services, including Enriched Communication, Trusted Digital Life, Business Life, Indoor Life, Mobile Open Life and Digital Entertainment. Its segments include Consumer, Business, National Wholesale and Other. It is engaged in developing various projects in areas, including Smart Green, Social Reading, Solutions for good schooling, Digital tourism 2.0, Smart Home, FriendTV and Big Data. Smart Green is the assessment of projects connected with the environment and potential partnerships with the local government offices for the monitoring of air in public offices and urban areas, using networks of sensors connected to the Company’s Cloud. The Company is involved, either alone or in partnership with external partners, in devising and developing healthcare services at national, regional and local level.

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