Verizon Communications (VZ) & Telefonica Brasil (VIV) Head to Head Survey

Verizon Communications (NYSE: VZ) and Telefonica Brasil (NYSE:VIV) are both large-cap telecommunications services companies, but which is the better stock? We will contrast the two companies based on the strength of their risk, dividends, valuation, institutional ownership, profitability, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Verizon Communications and Telefonica Brasil, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Verizon Communications 0 18 7 0 2.28
Telefonica Brasil 0 2 1 0 2.33

Verizon Communications currently has a consensus target price of $51.59, indicating a potential downside of 2.24%. Telefonica Brasil has a consensus target price of $16.03, indicating a potential upside of 4.52%. Given Telefonica Brasil’s stronger consensus rating and higher possible upside, analysts plainly believe Telefonica Brasil is more favorable than Verizon Communications.

Institutional & Insider Ownership

63.2% of Verizon Communications shares are held by institutional investors. Comparatively, 9.3% of Telefonica Brasil shares are held by institutional investors. 0.1% of Verizon Communications shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares Verizon Communications and Telefonica Brasil’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Verizon Communications 12.80% 58.66% 6.13%
Telefonica Brasil 10.00% 6.29% 4.23%

Risk & Volatility

Verizon Communications has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Earnings and Valuation

This table compares Verizon Communications 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
Verizon Communications $125.98 billion 1.71 $13.13 billion $3.90 13.53
Telefonica Brasil $12.25 billion 2.12 $1.17 billion $0.77 19.92

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

Dividends

Verizon Communications pays an annual dividend of $2.36 per share and has a dividend yield of 4.5%. Telefonica Brasil pays an annual dividend of $0.58 per share and has a dividend yield of 3.8%. Verizon Communications pays out 60.5% of its earnings in the form of a dividend. Telefonica Brasil pays out 75.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Verizon Communications has raised its dividend for 4 consecutive years and Telefonica Brasil has raised its dividend for 10 consecutive years. Verizon Communications is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Verizon Communications beats Telefonica Brasil on 11 of the 17 factors compared between the two stocks.

About Verizon Communications

Verizon Communications Inc. is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales, to consumer, business and government customers across the United States. The Wireline segment offers voice, data and video communications products and services, such as broadband video, data center and cloud services, security and managed network services, and local and long distance voice services. The Company has combined Yahoo! Inc.’s operating assets with its existing AOL Inc. business to create a new subsidiary, Oath Inc., owns a diverse house of more than 50 media and technology brands. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, Yahoo Finance and Yahoo Mail.

About Telefonica Brasil

Telefonica Brasil S.A. is a mobile telecommunications company in Brazil offering postpaid mobile services. The Company also operates as a fixed telecommunications company in the state of Sao Paulo. The Company markets its mobile services under its Vivo brand. It offers its clients a portfolio of products, including mobile and fixed voice, mobile data, fixed broadband, ultra-fast broadband, Pay television, information technology and digital services. Its operations consist of local and long distance fixed telephone services; mobile services, including value-added services; data services, including broadband services and mobile data services; Pay television services through direct to home (DTH), Internet protocol television (IPTV) and cable; network services, such as rental of facilities, as well as other services; wholesale services, including interconnection; digital services; services designed specifically for corporate customers, and the sale of wireless devices and accessories.

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