Head-To-Head Survey: BCE (BCE) & TELUS (TU)

BCE (NYSE: BCE) and TELUS (NYSE:TU) are both large-cap telecommunications services companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Risk & Volatility

BCE has a beta of 0.35, indicating that its stock price is 65% less volatile than the S&P 500. Comparatively, TELUS has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
BCE 12.78% 20.15% 5.65%
TELUS 9.61% 18.72% 5.38%

Dividends

BCE pays an annual dividend of $2.30 per share and has a dividend yield of 4.8%. TELUS pays an annual dividend of $1.58 per share and has a dividend yield of 4.2%. BCE pays out 91.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TELUS pays out 95.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BCE is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for BCE and TELUS, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BCE 0 4 5 0 2.56
TELUS 0 2 7 0 2.78

BCE presently has a consensus price target of $57.40, suggesting a potential upside of 18.60%. TELUS has a consensus price target of $46.17, suggesting a potential upside of 22.85%. Given TELUS’s stronger consensus rating and higher possible upside, analysts plainly believe TELUS is more favorable than BCE.

Institutional and Insider Ownership

44.5% of BCE shares are held by institutional investors. Comparatively, 52.2% of TELUS shares are held by institutional investors. 0.2% of BCE shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares BCE and TELUS’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BCE $16.40 billion 2.66 $2.29 billion $2.51 19.28
TELUS $9.66 billion 2.31 $923.60 million $1.65 22.78

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

Summary

BCE beats TELUS on 10 of the 16 factors compared between the two stocks.

BCE Company Profile

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.

TELUS Company Profile

TELUS Corporation (TELUS) is a telecommunications company. The Company provides a range of telecommunications services and products, including wireless and wireline voice and data. Its data services include Internet protocol (IP), television (TV), hosting, managed information technology and cloud-based services, and certain healthcare solutions. The Company operates through two business segments: Wireless segment and Wireline segment. Its wireless and wireline businesses are primarily operated through TELUS Communications Company (TCC). The Company offers business services, including healthcare, across wireless and wireline are supported through TELUS sales representatives, product specialists, independent dealers and online self-serve applications for small and medium-sized businesses (SMBs). Its business process outsourcing services are supported through sales representatives and client relationship management teams.

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