Telefonica Brasil (NYSE: VIV) and Level 3 Communications (NYSE:LVLT) are both large-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, dividends, analyst recommendations, earnings, risk, valuation and institutional ownership.

Valuation & Earnings

This table compares Telefonica Brasil and Level 3 Communications’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Telefonica Brasil $13.52 billion 2.06 $4.44 billion $0.74 22.34
Level 3 Communications $8.17 billion 2.37 $2.66 billion $1.76 30.32

Telefonica Brasil has higher revenue and earnings than Level 3 Communications. Telefonica Brasil is trading at a lower price-to-earnings ratio than Level 3 Communications, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

10.0% of Telefonica Brasil shares are held by institutional investors. Comparatively, 98.7% of Level 3 Communications shares are held by institutional investors. 0.5% of Level 3 Communications shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Telefonica Brasil and Level 3 Communications’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Telefonica Brasil 9.41% 5.91% 3.97%
Level 3 Communications 7.85% 5.80% 2.55%

Volatility & Risk

Telefonica Brasil has a beta of 1.35, indicating that its stock price is 35% more volatile than the S&P 500. Comparatively, Level 3 Communications has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations for Telefonica Brasil and Level 3 Communications, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Telefonica Brasil 0 2 1 0 2.33
Level 3 Communications 1 11 2 0 2.07

Telefonica Brasil currently has a consensus price target of $15.00, suggesting a potential downside of 9.26%. Level 3 Communications has a consensus price target of $61.03, suggesting a potential upside of 14.36%. Given Level 3 Communications’ higher probable upside, analysts plainly believe Level 3 Communications is more favorable than Telefonica Brasil.

Dividends

Telefonica Brasil pays an annual dividend of $0.55 per share and has a dividend yield of 3.3%. Level 3 Communications does not pay a dividend. Telefonica Brasil pays out 74.3% of its earnings in the form of a dividend. Telefonica Brasil has raised its dividend for 4 consecutive years.

Summary

Telefonica Brasil beats Level 3 Communications on 9 of the 17 factors compared between the two stocks.

Telefonica Brasil Company Profile

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.

Level 3 Communications Company Profile

Level 3 Communications, Inc. is a provider of a range of integrated communications services. The Company’s operating segments include North America, EMEA and Latin America. The North America includes operations in Atlanta, Georgia; Littleton, Colorado; Miami, Florida; Montreal, Canada; New York, New York; Phoenix, Arizona; Pittsburgh, Pennsylvania; Southfield, Michigan, and Tulsa, Oklahoma. The Europe segment includes operations in Basingstoke, England; Crewe, England; Dublin, Ireland; London, England; Amsterdam, The Netherlands, and Paris, France. The Latin America includes operations in Colombia; Buenos Aires, Argentina; Caracas, Venezuela; Lima, Peru; Quito, Ecuador; Santiago, Chile, and Sao Paulo, Brazil. It offers optical, Internet Protocol, computing and storage technologies. It offers a range of communications services, including Internet Protocol (IP) and data services, transport and fiber services, colocation and data center services, security services and voice services.

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