Critical Review: Vonage (VG) vs. Telefonica Brasil (VIV)

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

Volatility & Risk

Vonage has a beta of -0.06, meaning that its stock price is 106% less volatile than the S&P 500. Comparatively, Telefonica Brasil has a beta of 1.38, meaning that its stock price is 38% more volatile than the S&P 500.

Earnings and Valuation

This table compares Vonage and Telefonica Brasil’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vonage $1.00 billion 3.41 -$33.93 million $0.28 51.07
Telefonica Brasil $13.54 billion 1.24 $1.44 billion $0.85 11.71

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

Insider & Institutional Ownership

85.7% of Vonage shares are owned by institutional investors. Comparatively, 10.0% of Telefonica Brasil shares are owned by institutional investors. 8.7% of Vonage shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for Vonage and Telefonica Brasil, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vonage 0 1 7 0 2.88
Telefonica Brasil 1 5 3 0 2.22

Vonage presently has a consensus target price of $12.25, indicating a potential downside of 14.34%. Telefonica Brasil has a consensus target price of $14.88, indicating a potential upside of 49.50%. Given Telefonica Brasil’s higher possible upside, analysts plainly believe Telefonica Brasil is more favorable than Vonage.

Dividends

Telefonica Brasil pays an annual dividend of $0.38 per share and has a dividend yield of 3.8%. Vonage does not pay a dividend. 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Vonage -1.14% 16.92% 9.59%
Telefonica Brasil 15.70% 9.70% 6.63%

Summary

Vonage beats Telefonica Brasil on 9 of the 17 factors compared between the two stocks.

About Vonage

Vonage Holdings Corp. provides communications services connecting people through cloud-connected devices worldwide. It offers various business services, including basic dial tone, call queue, conferencing, call groups, mobile functionality, CRM integration, and detailed analytics, as well as Vonage Business Cloud and Vonage Enterprise services. The company also provides home telephone services through various service plans with basic features, such as voicemail, call waiting, call forwarding, simulring, visual voicemail, and extensions, as well as area code selection, virtual phone number, and Web-enabled voicemail. Its primary home telephone offerings include Vonage World plan that offers unlimited domestic calling; calling to landline phones in approximately 60 countries; and calling to mobile phones in various countries, as well as Vonage North America plan for unlimited calling across the United States, Canada, Mexico, and Puerto Rico. In addition, the company provides Vonage-enabled devices, which allow customers to use the Internet connection for their computer and telephones at the same time; and high-speed broadband Internet service that allows calls over the Internet either from a telephone through a Vonage-enabled device, or through soft phone software, or mobile client applications. It sells its products through its sales agents, Websites, toll free numbers, and retailers for consumers and businesses in the United States, the United Kingdom, and Canada. As of December 31, 2017, it had approximately 2.2 million consumer subscriber lines and business seats. The company was incorporated in 2000 and is headquartered in Holmdel, New Jersey.

About Telefonica Brasil

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.

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