Critical Survey: Telefonica Brasil (VIV) and PCCW (PCCWY)

Telefonica Brasil (NYSE:VIV) and PCCW (OTCMKTS:PCCWY) are both utilities companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, valuation, dividends, institutional ownership, profitability and risk.

Volatility & Risk

Telefonica Brasil has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, PCCW has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Telefonica Brasil 15.70% 9.70% 6.63%
PCCW N/A N/A N/A

Analyst Recommendations

This is a summary of recent ratings and price targets for Telefonica Brasil and PCCW, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonica Brasil 1 5 3 0 2.22
PCCW 0 0 0 0 N/A

Telefonica Brasil presently has a consensus price target of $14.38, suggesting a potential upside of 53.09%. Given Telefonica Brasil’s higher possible upside, equities research analysts clearly believe Telefonica Brasil is more favorable than PCCW.

Dividends

Telefonica Brasil pays an annual dividend of $0.38 per share and has a dividend yield of 4.0%. PCCW pays an annual dividend of $0.19 per share and has a dividend yield of 3.3%. Telefonica Brasil pays out 44.7% of its earnings in the form of a dividend. Telefonica Brasil has increased its dividend for 5 consecutive years. Telefonica Brasil is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Telefonica Brasil and PCCW’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Telefonica Brasil $13.54 billion 1.17 $1.44 billion $0.85 11.05
PCCW $4.75 billion 0.93 $288.16 million N/A N/A

Telefonica Brasil has higher revenue and earnings than PCCW.

Insider & Institutional Ownership

10.0% of Telefonica Brasil shares are held by institutional investors. Comparatively, 0.0% of PCCW shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Telefonica Brasil beats PCCW on 12 of the 13 factors compared between the two stocks.

Telefonica Brasil Company Profile

Telefônica Brasil S.A. provides mobile and fixed line telecommunications services to residential and corporate customers 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 and 4G, as well as mobile value-added services and wireless roaming services. The company also offers data services, including broadband and mobile data services. In addition, it provides pay TV services through direct to home satellite technology, IPTV, and cable, as well as pay-per-view and video on demand services; network services, such as rental of facilities; other services comprising Internet access, private network connectivity, computer equipment leasing, extended service, detects, voice mail and cellular blocker, and others; wholesale services, including interconnection services to users of other network providers; and digital services in the field of financial services, machine-to-machine operations, e-health solutions, security, education, insurance, entertainment, and mobile advertising. 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 handsets, smartphones, broadband USB modems, and devices. Additionally, it provides telecommunications solutions and IT support to various industries, such as retail, manufacturing, services, financial institutions, government, etc. Telefônica Brasil S.A. offers its solutions through its stores, dealers, retail and distribution channels, and door-to-door 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. Telefônica Brasil S.A. is a subsidiary of SP Telecomunicações Participações Ltda.

PCCW Company Profile

PCCW Limited provides telecommunications and related services in Hong Kong, Macau, Mainland China, and internationally. The company's services include local telephony, local data and broadband, mobile and international telecommunications, and satellite-based and network-based telecommunications services; and outsourcing, consulting, and contact center services. It also provides technical support, electronics communications engineering, and products and solutions, as well as free television, pay television program, and interactive multimedia services; sells advertising in various telephone directories and on the Internet; publishes directories; and sells mobile handsets and accessories. In addition, the company offers broadcasting and related services, management and engineering support services, customer relationship management and customer contact management solutions, content for various media, and outsourced call center and data center services; and over-the-top video services under the Viu brand, as well as sells customer premises equipment and related solutions. Further, it engages in the sale, distribution, and marketing of telecommunication products; supply of broadband Internet access solutions and Web services; provision of data services, and; software development, systems integration, consulting, and informatization activities; the provision of computer and IP/IT related value-added services to business customers; logistics, printing, business process, and ICT solutions; property investment, development, management, and leasing activities; and ski operations. Additionally, the company offers Internet portal digital media entertainment platform; technical consultancy services; multi-platform digital music services; and infrastructure construction, application, and specific business process outsourcing services, as well as cloud computing solutions. PCCW Limited was founded in 1925 and is headquartered in Quarry Bay, Hong Kong.

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