Contrasting PT Telekomunikasi Indonesia, Tbk (NYSE:TLK) & Telefonica Brasil (NYSE:VIV)

PT Telekomunikasi Indonesia, Tbk (NYSE:TLK) and Telefonica Brasil (NYSE:VIV) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, earnings, profitability and analyst recommendations.

Institutional and Insider Ownership

5.2% of Telefonica Brasil shares are owned by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares PT Telekomunikasi Indonesia, Tbk and Telefonica Brasil’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PT Telekomunikasi Indonesia, Tbk	14.78%	13.86%	7.44%
Telefonica Brasil	10.37%	8.67%	4.75%

Earnings and Valuation

This table compares PT Telekomunikasi Indonesia, Tbk and Telefonica Brasil”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PT Telekomunikasi Indonesia, Tbk	$9.45 billion	N/A	$1.47 billion	$1.35	15.49
Telefonica Brasil	$10.36 billion	2.47	$1.03 billion	$0.66	23.83

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

Analyst Recommendations

This is a summary of recent recommendations for PT Telekomunikasi Indonesia, Tbk and Telefonica Brasil, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PT Telekomunikasi Indonesia, Tbk	0	2	0	0	2.00
Telefonica Brasil	2	3	2	1	2.25

Telefonica Brasil has a consensus price target of $13.12, indicating a potential downside of 16.57%. Given Telefonica Brasil’s stronger consensus rating and higher possible upside, analysts clearly believe Telefonica Brasil is more favorable than PT Telekomunikasi Indonesia, Tbk.

Dividends

PT Telekomunikasi Indonesia, Tbk pays an annual dividend of $1.05 per share and has a dividend yield of 5.0%. Telefonica Brasil pays an annual dividend of $0.40 per share and has a dividend yield of 2.5%. PT Telekomunikasi Indonesia, Tbk pays out 77.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefonica Brasil pays out 60.6% of its earnings in the form of a dividend.

Risk and Volatility

PT Telekomunikasi Indonesia, Tbk has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500.

Summary

Telefonica Brasil beats PT Telekomunikasi Indonesia, Tbk on 9 of the 15 factors compared between the two stocks.

About PT Telekomunikasi Indonesia, Tbk

Perusahaan Perseroan (Persero) PT Telekomunikasi Indonesia Tbk provides information and communications technology, and telecommunications network services worldwide. The company operates through mobile, consumer, enterprise, Wholesale and International Business, and Other segments. The Mobile segment offers mobile voice, SMS, value added services, and mobile broadband services. The Consumer segment provides fixed wireline, pay TV, and internet services; and other telecommunication services to home customers. The Enterprise segment offers end-to-end solution to corporate and institutions. The Wholesale and International Business segment provides interconnection services, broadband access, information technology services, data, and internet services to other licensed operator and institutions. The Other segment offers digital content products, big data, business to business commerce, and financial services to individual and corporate customers. The company also engages in leasing of towers, and digital support and other telecommunication services; provision of consultation service of hardware, computer software, and data center, as well as multimedia portal services; business management consulting; property development and management; trading service related to telecommunication, information, multimedia technology, entertainment, and investment; and digital content exchange hub services. The company was founded in 1884 and is headquartered in Bandung, Indonesia.

About Telefonica Brasil

Telefônica Brasil S.A., together with its subsidiaries, operates as a mobile telecommunications company in Brazil. Its fixed line services portfolio includes local, domestic long-distance, and international long-distance calls; and mobile portfolio comprises voice and broadband internet access through 3G, 4G, 4.5G, and 5G, as well as mobile value-added and wireless roaming services. The company also offers data services, including broadband and mobile data services. In addition, it provides pay TV services through IPTV technologies; network services, such as rental of facilities; other services comprising internet access, private network connectivity, computer equipment leasing, extended service, caller identification, voice mail, cellular blocker, and others; wholesale services, including interconnection services to users of other network providers; and digital services, such as entertainment, cloud, and security and financial services. Further, the company offers multimedia communication services, which include audio, data, voice and other sounds, images, texts, and other information, as well as sells devices, such as smartphones, broadband USB modems, and other devices. Additionally, it provides telecommunications solutions and IT support to various industries, such as retail, manufacturing, services, financial institutions, government, etc. It markets and sells its solutions through own stores, dealers, retail and distribution channels, door-to-door sales, and outbound tele sales. The company was formerly known as Telecomunicações de São Paulo S.A. – TELESP and changed its name to Telefônica Brasil S.A. in October 2011. The company was incorporated in 1998 and is headquartered in São Paulo, Brazil.