Financial Analysis: Telecom Argentina Stet - France Telecom (TEO) versus Telecom Italia S.P.A. (TI)

Telecom Argentina Stet – France Telecom (NYSE: TEO) and Telecom Italia S.P.A. (NYSE:TI) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitabiliy, valuation, dividends, earnings, risk, analyst recommendations and institutional ownership.

Insider and Institutional Ownership

5.9% of Telecom Argentina Stet – France Telecom shares are owned by institutional investors. Comparatively, 0.8% of Telecom Italia S.P.A. shares are owned by institutional investors. 1.0% of Telecom Argentina Stet – France Telecom shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Telecom Argentina Stet – France Telecom and Telecom Italia S.P.A.’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Telecom Argentina Stet – France Telecom	$3.23 billion	1.67	$841.61 million	$1.69	16.50
Telecom Italia S.P.A.	$22.91 billion	0.96	$9.92 billion	N/A	N/A

Telecom Italia S.P.A. has higher revenue and earnings than Telecom Argentina Stet – France Telecom.

Dividends

Telecom Argentina Stet – France Telecom pays an annual dividend of $0.45 per share and has a dividend yield of 1.6%. Telecom Italia S.P.A. does not pay a dividend. Telecom Argentina Stet – France Telecom pays out 26.6% of its earnings in the form of a dividend.

Risk and Volatility

Telecom Argentina Stet – France Telecom has a beta of 1.42, suggesting that its share price is 42% more volatile than the S&P 500. Comparatively, Telecom Italia S.P.A. has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Telecom Argentina Stet – France Telecom and Telecom Italia S.P.A., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Telecom Argentina Stet – France Telecom	0	1	3	0	2.75
Telecom Italia S.P.A.	0	3	2	0	2.40

Telecom Argentina Stet – France Telecom currently has a consensus target price of $26.50, suggesting a potential downside of 4.95%. Given Telecom Argentina Stet – France Telecom’s stronger consensus rating and higher probable upside, research analysts clearly believe Telecom Argentina Stet – France Telecom is more favorable than Telecom Italia S.P.A..

Profitability

This table compares Telecom Argentina Stet – France Telecom and Telecom Italia S.P.A.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Telecom Argentina Stet – France Telecom	8.92%	25.23%	10.79%
Telecom Italia S.P.A.	N/A	N/A	N/A

Summary

Telecom Argentina Stet – France Telecom beats Telecom Italia S.P.A. on 11 of the 14 factors compared between the two stocks.

Telecom Argentina Stet – France Telecom Company Profile

Telecom Argentina S.A. provides fixed-line telecommunications services in Argentina, and also provides other telephone-related services, such as international long-distance service, data transmission, information technology solutions outsourcing and Internet services. The Company’s segments include Fixed Telecommunications Services (Fixed Services), Personal Mobile Telecommunications Services (Personal Mobile Services) and Nucleo Mobile Telecommunications Services (Nucleo Mobile Services). The Company, through its subsidiaries, also provides mobile telecommunications services and international wholesale services. The Fixed services segment consists of basic telephone services, interconnection services, data transmission and Internet services, information and communication technology services, and other telephone services. The Company, through its subsidiaries, such as Telecom Personal S.A. and Nucleo S.A., provides mobile services in Argentina and Paraguay, respectively.

Telecom Italia S.P.A. Company Profile

Telecom Italia S.p.A. (Telecom Italia) operates fixed voice and data infrastructure in Italy, and provides mobile network platforms. The Company focuses on various areas of digital services, including Enriched Communication, Trusted Digital Life, Business Life, Indoor Life, Mobile Open Life and Digital Entertainment. Its segments include Consumer, Business, National Wholesale and Other. It is engaged in developing various projects in areas, including Smart Green, Social Reading, Solutions for good schooling, Digital tourism 2.0, Smart Home, FriendTV and Big Data. Smart Green is the assessment of projects connected with the environment and potential partnerships with the local government offices for the monitoring of air in public offices and urban areas, using networks of sensors connected to the Company’s Cloud. The Company is involved, either alone or in partnership with external partners, in devising and developing healthcare services at national, regional and local level.