Analyzing Telefónica (NYSE:TEF) & TALKTALK TELECO/ADR (OTCMKTS:TKTCY)

Telefónica (NYSE:TEF) and TALKTALK TELECO/ADR (OTCMKTS:TKTCY) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, analyst recommendations, profitability, institutional ownership and earnings.

Earnings & Valuation

This table compares Telefónica and TALKTALK TELECO/ADR’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telefónica $54.24 billion 0.46 $1.28 billion $0.73 6.63
TALKTALK TELECO/ADR $1.99 billion 0.78 $194.52 million $0.34 20.00

Telefónica has higher revenue and earnings than TALKTALK TELECO/ADR. Telefónica is trading at a lower price-to-earnings ratio than TALKTALK TELECO/ADR, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Telefónica and TALKTALK TELECO/ADR, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefónica 2 14 1 0 1.94
TALKTALK TELECO/ADR 0 0 0 0 N/A

Telefónica presently has a consensus target price of $5.00, indicating a potential upside of 3.31%. Given Telefónica’s higher possible upside, equities research analysts plainly believe Telefónica is more favorable than TALKTALK TELECO/ADR.

Dividends

Telefónica pays an annual dividend of $0.34 per share and has a dividend yield of 7.0%. TALKTALK TELECO/ADR pays an annual dividend of $0.11 per share and has a dividend yield of 1.6%. Telefónica pays out 46.6% of its earnings in the form of a dividend. TALKTALK TELECO/ADR pays out 32.4% 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. Telefónica has increased its dividend for 1 consecutive years. Telefónica is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Telefónica has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500. Comparatively, TALKTALK TELECO/ADR has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500.

Profitability

This table compares Telefónica and TALKTALK TELECO/ADR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Telefónica 0.39% 12.65% 2.49%
TALKTALK TELECO/ADR N/A N/A N/A

Insider and Institutional Ownership

0.9% of Telefónica shares are held by institutional investors. 0.0% of Telefónica shares are held by 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.

Summary

Telefónica beats TALKTALK TELECO/ADR on 13 of the 16 factors compared between the two stocks.

About Telefónica

Telefónica, S.A. provides mobile and fixed communication services in Europe and Latin America. The company's mobile and related services and products comprise mobile voice, value added, mobile data, Internet, wholesale, corporate, roaming, fixed wireless, trunking, and paging services. Its fixed telecommunication services include PSTN lines; ISDN accesses; public telephone services; local, domestic, and international long-distance and fixed-to-mobile communications; corporate communications; supplementary and business oriented value-added; video telephony; intelligent network; and telephony information services. The company also leases and sells handset equipment; and provides Internet and broadband multimedia services comprising Internet service provider, portal and network, retail and wholesale broadband access, narrowband switched access, high-speed Internet through fibre to the home, and voice over Internet protocol services. In addition, it offers leased lines; virtual private network; fibre optics; hosting and application; outsourcing and consultancy; desktop; and system integration and professional services. Further, the company offers wholesale services for telecommunication operators, including domestic interconnection; international wholesale; leased lines for other operators; and local loop leasing under the unbundled local loop regulation framework, as well as bit stream services, wholesale line rental accesses, and leased ducts for other operators' fiber deployment. Additionally, it provides Internet protocol television (TV), over-the-top network TV, cable and satellite TV, and pay TV services; Kite connectivity platform; financial and other payment, security, cloud computing, advertising, big data, and digital telco experience services; and Aura and Movistar Home. The company was founded in 1924 and is headquartered in Madrid, Spain.

About TALKTALK TELECO/ADR

TalkTalk Telecom Group PLC provides fixed line, TV, and mobile telecommunications services. It offers landline, broadband, fiber, TV, and mobile services, including fixed price plans and unlimited broadband usage, as well as HomeSafe, a network-based security and filtering system. The company also provides various business-grade communications products and services, including Internet access, data, voice, and mobile. TalkTalk Telecom Group PLC was founded in 2002 and is based in London, the United Kingdom.

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