Head to Head Analysis: ARC Group Worldwide (ARCW) & Telefonica Brasil (VIV)

ARC Group Worldwide (NASDAQ: ARCW) and Telefonica Brasil (NYSE:VIV) are both computer and technology companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Analyst Ratings

This is a breakdown of recent ratings for ARC Group Worldwide and Telefonica Brasil, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ARC Group Worldwide	0	1	1	0	2.50
Telefonica Brasil	0	2	1	0	2.33

ARC Group Worldwide currently has a consensus price target of $5.75, suggesting a potential upside of 150.00%. Telefonica Brasil has a consensus price target of $15.00, suggesting a potential upside of 0.54%. Given ARC Group Worldwide’s stronger consensus rating and higher possible upside, equities research analysts plainly believe ARC Group Worldwide is more favorable than Telefonica Brasil.

Institutional and Insider Ownership

16.4% of ARC Group Worldwide shares are held by institutional investors. Comparatively, 11.0% of Telefonica Brasil shares are held by institutional investors. 3.2% of ARC Group Worldwide shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Telefonica Brasil pays an annual dividend of $0.65 per share and has a dividend yield of 4.4%. ARC Group Worldwide does not pay a dividend. Telefonica Brasil pays out 87.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Telefonica Brasil has increased its dividend for 4 consecutive years.

Risk and Volatility

ARC Group Worldwide has a beta of 3.42, meaning that its share price is 242% more volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 1.34, meaning that its share price is 34% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
ARC Group Worldwide	-0.70%	-7.31%	-2.91%
Telefonica Brasil	9.41%	5.91%	3.97%

Earnings and Valuation

This table compares ARC Group Worldwide and Telefonica Brasil’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
ARC Group Worldwide	$111.99 million	0.37	$9.57 million	($0.04)	-57.50
Telefonica Brasil	$13.57 billion	1.86	$4.46 billion	$0.74	20.16

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

Summary

Telefonica Brasil beats ARC Group Worldwide on 9 of the 15 factors compared between the two stocks.

About ARC Group Worldwide

ARC Group Worldwide, Inc. is a manufacturing company. The Company has four segments: Precision Components Group, 3DMT Group, Flanges and Fittings Group, and Wireless Group. It provides a set of manufacturing solutions, from design and prototyping through production. Through the Company’s product offering, it provides its customers with a prototyping and production solution for both precision metal and plastic fabrication. The Precision Components Group companies provide fabricated metal components using processes, consisting of metal injection molding, precision metal stamping and hermetic sealing. The 3DMT Group focuses on rapid prototyping, short-run production and rapid tooling. The Flange and Fittings Group consists of General Flange and Forge. The Wireless Group focuses on wireless broadband technology related to propagation and optimization. The Wireless Group designs and develops hardware, including antennas, radios and related accessories.

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.