China Mobile (CHL) and Telefonica (TEF) Critical Contrast

China Mobile (NYSE:CHL) and Telefonica (NYSE:TEF) are both large-cap computer and technology companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, earnings, valuation, risk and dividends.

Profitability

This table compares China Mobile and Telefonica’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
China Mobile N/A N/A N/A
Telefonica 6.52% 16.12% 3.68%



Institutional and Insider Ownership

2.0% of China Mobile shares are held by institutional investors. Comparatively, 0.8% of Telefonica shares are held by institutional investors. 0.0% of Telefonica shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility and Risk

China Mobile has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, Telefonica has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for China Mobile and Telefonica, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
China Mobile 0 5 1 0 2.17
Telefonica 2 3 5 0 2.30

Dividends

China Mobile pays an annual dividend of $2.10 per share and has a dividend yield of 4.6%. Telefonica pays an annual dividend of $0.36 per share and has a dividend yield of 4.5%. China Mobile pays out 50.8% of its earnings in the form of a dividend. Telefonica pays out 42.9% 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.

Earnings & Valuation

This table compares China Mobile and Telefonica’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
China Mobile $109.60 billion 1.71 $16.91 billion $4.13 11.08
Telefonica $58.75 billion 0.71 $3.54 billion $0.84 9.56

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

Summary

Telefonica beats China Mobile on 8 of the 15 factors compared between the two stocks.

About China Mobile

There is no company description available for China Mobile Ltd.

About Telefonica

Telefónica, S.A. provides mobile and fixed communication services primarily in the European Union and Latin America. The company's mobile and related services and products comprise mobile voice, value added, mobile data and Internet, wholesale, corporate, roaming, fixed wireless, and 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, as well as provides Internet and broadband multimedia services comprising Internet service provider; portal and network; retail and wholesale broadband access; narrowband switched access to Internet; high-speed Internet services through fiber to the home; and voice over Internet protocol services. In addition, it offers data and business-solutions services that include leased lines; virtual private network; fiber 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' network deployment; 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; M2M connectivity platforms; and financial and other payment, security, cloud computing, advertising, big data, and digital telco experience services. The company was founded in 1924 and is based in Madrid, Spain.

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