Financial Analysis: Vodafone (VOD) versus Chunghwa Telecom (CHT)

Vodafone (NASDAQ: VOD) and Chunghwa Telecom (NYSE:CHT) are both large-cap computer and technology companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, dividends, analyst recommendations, profitability, valuation and risk.

Profitability

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This table compares Vodafone and Chunghwa Telecom’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vodafone N/A N/A N/A
Chunghwa Telecom 17.08% 10.57% 8.68%

Analyst Ratings

This is a summary of recent recommendations and price targets for Vodafone and Chunghwa Telecom, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vodafone 1 0 10 1 2.92
Chunghwa Telecom 1 0 0 0 1.00

Vodafone presently has a consensus price target of $31.96, suggesting a potential upside of 6.52%. Given Vodafone’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Vodafone is more favorable than Chunghwa Telecom.

Dividends

Vodafone pays an annual dividend of $1.73 per share and has a dividend yield of 5.8%. Chunghwa Telecom pays an annual dividend of $1.29 per share and has a dividend yield of 3.3%. Vodafone pays out 194.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chunghwa Telecom pays out 78.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Vodafone has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500. Comparatively, Chunghwa Telecom has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500.

Valuation and Earnings

This table compares Vodafone and Chunghwa Telecom’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vodafone $52.29 billion 1.53 -$6.91 billion $0.89 33.71
Chunghwa Telecom $7.48 billion 4.01 $1.28 billion $1.64 23.59

Chunghwa Telecom has lower revenue, but higher earnings than Vodafone. Chunghwa Telecom is trading at a lower price-to-earnings ratio than Vodafone, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

10.9% of Vodafone shares are held by institutional investors. Comparatively, 3.0% of Chunghwa Telecom shares are held by institutional investors. 1.0% of Vodafone shares are held by company insiders. Comparatively, 1.0% of Chunghwa Telecom 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.

Summary

Vodafone beats Chunghwa Telecom on 9 of the 16 factors compared between the two stocks.

Vodafone Company Profile

Vodafone Group Plc operates as a telecommunications company worldwide. The company offers voice, messaging, and data services across mobile and fixed networks; broadband and TV services; cloud and hosting for storing data and applications in the cloud, as well as Internet protocol-virtual private network services; roaming services; and converged communication services to small businesses and large multinational companies. It also provides M-Pesa, a mobile money service; GigaKombi; GigaTV, an advanced digital TV service; and Vodafone One, an integrated fixed, mobile, and TV service. In addition, the company offers Internet of Things to connect machines to the Internet; international voice, Internet protocol transit, and secure international lines; carrier services for other businesses to transmit information; and smartphones and tablets. The company serves 516 million mobile, 18 million fixed broadband, and 14 million TV customers. It offers its products primarily through approximately 7,000 own-branded and franchised stores, and indirect partners, as well as through online sales and telesales. Vodafone Group Plc has a strategic alliance with SoftBank Corp. for commercial and operational support to multinational enterprise customers operating in Japan. The company was founded in 1984 and is based in Newbury, the United Kingdom.

Chunghwa Telecom Company Profile

Chunghwa Telecom Co., Ltd. engages in the provision of telecommunication and information related services. It operates through the following business segments: Domestic Fixed Communications, Mobile Communications, Internet, International Fixed Communications, and Others. The company was founded on June 15, 1996 and is headquartered in Taipei, Taiwan.

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