Financial Review: Verizon Communications (NYSE:VZ) vs. Swisscom (OTCMKTS:SCMWY)

Swisscom (OTCMKTS:SCMWY) and Verizon Communications (NYSE:VZ) are both large-cap communication services companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, dividends, profitability, earnings, analyst recommendations and risk.

Profitability

This table compares Swisscom and Verizon Communications’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Swisscom	8.86%	11.31%	3.72%
Verizon Communications	11.64%	19.48%	5.07%

Dividends

Swisscom pays an annual dividend of $2.03 per share and has a dividend yield of 2.4%. Verizon Communications pays an annual dividend of $2.83 per share and has a dividend yield of 6.5%. Swisscom pays out 63.4% of its earnings in the form of a dividend. Verizon Communications pays out 73.7% 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. Verizon Communications has raised its dividend for 20 consecutive years. Verizon Communications is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations for Swisscom and Verizon Communications, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Swisscom	3	5	0	0	1.62
Verizon Communications	0	17	13	0	2.43

Verizon Communications has a consensus target price of $50.82, indicating a potential upside of 16.44%. Given Verizon Communications’ stronger consensus rating and higher probable upside, analysts plainly believe Verizon Communications is more favorable than Swisscom.

Institutional and Insider Ownership

62.1% of Verizon Communications shares are held by institutional investors. 1.0% of Swisscom shares are held by company insiders. Comparatively, 0.0% of Verizon Communications 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.

Risk and Volatility

Swisscom has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500. Comparatively, Verizon Communications has a beta of 0.26, meaning that its stock price is 74% less volatile than the S&P 500.

Earnings and Valuation

This table compares Swisscom and Verizon Communications”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Swisscom	$18.16 billion	23.80	$1.53 billion	$3.20	26.07
Verizon Communications	$138.19 billion	1.31	$17.17 billion	$3.84	11.37

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

Summary

Verizon Communications beats Swisscom on 12 of the 17 factors compared between the two stocks.

About Swisscom

Swisscom AG provides telecommunication services primarily in Switzerland, Italy, and internationally. It operates through three segments: Swisscom Switzerland, Fastweb, and Other Operating. The company offers mobile and fixed-network services, such as telephony, TV, broadband, and mobile offerings, as well as sells terminal equipment; and telecom and communications solutions for large corporations and small and medium-sized enterprises. It also provides cloud, outsourcing, workplace, mobile phone, networking, business process optimization, SAP, and security and authentication solutions, as well as a range of services to the banking industry; Internet of Things solutions; digitization services to the healthcare sector; IT systems for health insurance companies; fixed-line and mobile networks by other telecommunication service providers; and roaming to foreign operators whose customers use its mobile networks, as well as broadband services and regulated products. In addition, the company plans, operates, and maintains network infrastructure and IT systems; provides support functions to finance, human resource, and strategy, as well as management of real estate and vehicle fleet; and offers broadband and mobile services, such as telephony, mobile offerings, and broadband services, as well as ICT solutions for residential, business, and wholesale customers. Further, it provides IT and network services; online and telephone directories; and cross-platform retail media and security communication services, as well as builds and maintains wired and wireless networks. The company was founded in 1998 and is based in Bern, Switzerland.

About Verizon Communications

Verizon Communications Inc., through its subsidiaries, engages in the provision of communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities worldwide. It operates in two segments, Verizon Consumer Group (Consumer) and Verizon Business Group (Business). The Consumer segment provides wireless services across the wireless networks in the United States under the Verizon and TracFone brands and through wholesale and other arrangements; and fixed wireless access (FWA) broadband through its wireless networks, as well as related equipment and devices, such as smartphones, tablets, smart watches, and other wireless-enabled connected devices. The segment also offers wireline services in the Mid-Atlantic and Northeastern United States, as well as Washington D.C. through its fiber-optic network, Verizon Fios product portfolio, and a copper-based network. The Business segment provides wireless and wireline communications services and products, including FWA broadband, data, video and conferencing, corporate networking, security and managed network, local and long-distance voice, and network access services to deliver various IoT services and products to businesses, government customers, and wireless and wireline carriers in the United States and internationally. The company was formerly known as Bell Atlantic Corporation and changed its name to Verizon Communications Inc. in June 2000. Verizon Communications Inc. was incorporated in 1983 and is headquartered in New York, New York.