Analyzing AT&T (T) and Bell Canada (BCE)

AT&T (NYSE: T) and Bell Canada (NYSE:BCE) are both large-cap computer and technology companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations for AT&T and Bell Canada, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AT&T 0 13 11 0 2.46
Bell Canada 0 4 3 0 2.43

AT&T presently has a consensus target price of $41.58, suggesting a potential upside of 19.18%. Bell Canada has a consensus target price of $57.00, suggesting a potential upside of 36.49%. Given Bell Canada’s higher probable upside, analysts plainly believe Bell Canada is more favorable than AT&T.

Profitability

This table compares AT&T and Bell Canada’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AT&T 18.34% 14.55% 4.39%
Bell Canada 12.25% 19.85% 5.61%

Dividends

AT&T pays an annual dividend of $2.00 per share and has a dividend yield of 5.7%. Bell Canada pays an annual dividend of $2.32 per share and has a dividend yield of 5.6%. AT&T pays out 65.6% of its earnings in the form of a dividend. Bell Canada pays out 88.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AT&T has raised its dividend for 33 consecutive years. AT&T is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares AT&T and Bell Canada’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
AT&T $160.55 billion 1.33 $29.45 billion $3.05 11.44
Bell Canada $17.52 billion 2.15 $2.25 billion $2.62 15.94

AT&T has higher revenue and earnings than Bell Canada. AT&T is trading at a lower price-to-earnings ratio than Bell Canada, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

56.0% of AT&T shares are held by institutional investors. Comparatively, 45.0% of Bell Canada shares are held by institutional investors. 0.1% of AT&T shares are held by company insiders. Comparatively, 0.2% of Bell Canada shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

AT&T has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500. Comparatively, Bell Canada has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500.

Summary

AT&T beats Bell Canada on 11 of the 17 factors compared between the two stocks.

AT&T Company Profile

AT&T Inc. provides communications and digital entertainment services. The company operates through four segments: Business Solutions, Entertainment Group, Consumer Mobility, and International. The Business Solutions segment offers wireless services, strategic services, legacy voice, data services, wireless equipment, and other services to multinational companies, governmental and wholesale customers, and individual subscribers. The Entertainment Group segment provides video entertainment and audio programming channels to approximately 25 million subscribers; broadband and Internet services to 13.5 million residential subscribers; local and long-distance voice services to residential customers, as well as DSL Internet access; and voice services provided over IP-based technology. The Consumer Mobility segment offers postpaid and prepaid wireless voice and data communications services to consumers, and wireless wholesale and resale subscribers; consulting, advertising, and application and co-location services; and sells a variety of handsets, wirelessly enabled computers, and personal computer wireless data cards through company-owned stores, agents, or third-party retail stores, as well as accessories, such as carrying cases, hands-free devices, and other items. The International segment offers digital television services, including local and international digital video entertainment and audio programming under the DIRECTV and SKY brands throughout Latin America. This segment offers postpaid and prepaid wireless services in Mexico to approximately 15 million subscribers under the AT&T and Unefon brands; and sells a range of handsets. The company was formerly known as SBC Communications Inc. and changed its name to AT&T Inc. in November 2005. AT&T Inc. was founded in 1983 and is based in Dallas, Texas.

Bell Canada Company Profile

BCE Inc., a telecommunications and media company, provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. The company operates through three segments: Bell Wireless, Bell Wireline, and Bell Media. The Bell Wireless segment offers integrated digital wireless voice and data communications products and services. The Bell Wireline segment provides data, including Internet access, Internet protocol TV and telephony, local telephone, and long distance, as well as other communications services and products; and satellite TV and connectivity services. This segment also offers home security and monitoring services; competitive local exchange carrier services; business service solutions, such as hosting and cloud, managed, professional, and infrastructure services; virtual private networks, point-to-point data networks, and international network solutions; and Web and audio conferencing, and email solutions. The Bell Media segment offers conventional, specialty, and pay TV; and digital media, radio broadcasting, and out-of-home advertising services, as well as sports and other event production and broadcasting services. This segment owns and operates approximately 30 conventional TV stations; 34 specialty and 4 pay TV channels; 105 licensed radio stations; 31,000 advertising faces; and 200 Websites and approximately 30 apps. The company also distributes mobile products. BCE Inc. offers its services through a network of corporate and dealer-owned retail stores, national retailers, and call center representatives, as well as Websites and door-to-door sales representatives. The company was formerly known as Bell Canada Enterprises Inc. BCE Inc. was founded in 1880 and is headquartered in Verdun, Canada.

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