Head-To-Head Contrast: AT&T (NYSE:T) versus Verizon Communications (NYSE:VZ)

AT&T (NYSE:T) and Verizon Communications (NYSE:VZ) are both large-cap computer and technology companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, dividends, institutional ownership, risk and earnings.

Insider and Institutional Ownership

54.7% of AT&T shares are owned by institutional investors. Comparatively, 66.0% of Verizon Communications shares are owned by institutional investors. 0.1% of AT&T shares are owned by insiders. Comparatively, 0.1% of Verizon Communications shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

AT&T has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500. Comparatively, Verizon Communications has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Profitability

This table compares AT&T and Verizon Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AT&T 8.05% 13.27% 4.76%
Verizon Communications 14.00% 33.26% 6.99%

Earnings & Valuation

This table compares AT&T and Verizon Communications’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AT&T $181.19 billion 1.18 $13.90 billion $3.57 8.37
Verizon Communications $131.87 billion 1.70 $19.27 billion $4.81 11.25

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for AT&T and Verizon Communications, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AT&T 2 14 11 0 2.33
Verizon Communications 0 15 6 1 2.36

AT&T currently has a consensus target price of $36.15, indicating a potential upside of 20.97%. Verizon Communications has a consensus target price of $61.41, indicating a potential upside of 13.50%. Given AT&T’s higher probable upside, equities analysts plainly believe AT&T is more favorable than Verizon Communications.

Dividends

AT&T pays an annual dividend of $2.08 per share and has a dividend yield of 7.0%. Verizon Communications pays an annual dividend of $2.46 per share and has a dividend yield of 4.5%. AT&T pays out 58.3% of its earnings in the form of a dividend. Verizon Communications pays out 51.1% 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. AT&T has raised its dividend for 35 consecutive years and Verizon Communications has raised its dividend for 15 consecutive years. AT&T is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Verizon Communications beats AT&T on 10 of the 17 factors compared between the two stocks.

About AT&T

AT&T Inc. provides telecommunication, media, and technology services worldwide. The company operates through four segments: Communications, WarnerMedia, Latin America, and Xandr. The Communications segment provides wireless and wireline telecom, video, and broadband and Internet services; video entertainment services using satellite, IP-based, and streaming options; and audio programming services under the AT&T, Cricket, AT&T PREPAID, and DIRECTV brands to residential and business customers. This segment also sells handsets, wirelessly enabled computers, and wireless data cards manufactured by various suppliers for use with company's voice and data services, as well as various accessories, such as carrying cases and hands-free devices through the company-owned stores, agents, and third-party retail stores. The WarnerMedia segment primarily produces, distributes, and licenses television programming and feature films; distributes home entertainment products in physical and digital formats; and produces and distributes mobile and console games, and consumer products, as well as offers brand licensing services. It also operates cable networks, multichannel premium pay television, and over-the-top services; and digital media properties. The Latin America segment offers video entertainment and audio programming services under the DIRECTV and SKY brands primarily to residential customers; pay-TV services, including HD sports video content; and postpaid and prepaid wireless services under the AT&T and Unefon brands, as well as sells various handsets through company-owned stores, agents, and third-party retail stores. The Xandr segment provides digital advertising services. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.

About Verizon Communications

Verizon Communications Inc., through its subsidiaries, offers communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company's Wireless segment provides wireless voice and data services; Internet access on various notebook computers and tablets; international travel wireless services; and network access services to deliver various Internet of Things products and services, as well as offers digital advertising and digital media services platforms. This segment also provides wireless devices, including smartphones and basic phones, wearables, and tablets and other Internet access devices. As of December 31, 2018, it had 118.0 million retail connections. Its Wireline segment offers traditional circuit-based network products and services; networking solutions, comprising private Internet protocol (IP), Ethernet, and software-defined wide area network, as well as cyber security services; local exchange, regional, long distance, and toll-free calling services; voice messaging and conferencing services; and workforce productivity and customer contact center solutions, as well as residential fixed connectivity solutions, including Internet, TV, and voice services under the Fios brand name. This segment also provides premises equipment, as well as installation, maintenance, and site services; data, voice, local dial tone, and broadband services primarily to local, long distance, and wireless carriers; voice and networking products, Fios services, IP networking, voice solutions, security, and managed information technology services for small and medium businesses, state and local governments, and educational institutions; and security and managed network services. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was founded in 1983 and is headquartered in New York, New York.

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