Uniti Group (NASDAQ:UNIT) versus Telefonica (NYSE:TEF) Critical Comparison

Telefonica (NYSE:TEF) and Uniti Group (NASDAQ:UNIT) are both communication services companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, risk, profitability and valuation.

Profitability

This table compares Telefonica and Uniti Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Telefonica	-5.23%	8.54%	1.96%
Uniti Group	28.68%	-133.07%	-4.09%

Institutional and Insider Ownership

1.1% of Telefonica shares are owned by institutional investors. Comparatively, 87.5% of Uniti Group shares are owned by institutional investors. 0.0% of Telefonica shares are owned by company insiders. Comparatively, 1.9% of Uniti Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Telefonica and Uniti Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Telefonica	3	3	0	0	1.50
Uniti Group	0	7	1	1	2.33

Telefonica presently has a consensus price target of $4.12, suggesting a potential upside of 8.01%. Uniti Group has a consensus price target of $11.47, suggesting a potential upside of 47.36%. Given Uniti Group’s stronger consensus rating and higher possible upside, analysts clearly believe Uniti Group is more favorable than Telefonica.

Risk & Volatility

Telefonica has a beta of 0.29, indicating that its stock price is 71% less volatile than the S&P 500. Comparatively, Uniti Group has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500.

Valuation & Earnings

This table compares Telefonica and Uniti Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Telefonica	$40.55 billion	0.53	-$53.02 million	($0.41)	-9.29
Uniti Group	$2.23 billion	0.85	$1.30 billion	$2.71	2.87

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

Summary

Uniti Group beats Telefonica on 12 of the 15 factors compared between the two stocks.

About Telefonica

Telefónica, S.A., together with its subsidiaries, provides telecommunications services in Europe and Latin America. The company offers mobile and related services and products, such as mobile voice, value added, mobile data and internet, wholesale, corporate, roaming, fixed wireless, and trunking and paging services. It also provides fixed telecommunication services, including PSTN lines; ISDN accesses; public telephone services; local, domestic, and international long-distance and fixed-to-mobile communications; corporate communications; supplementary value-added services; video telephony; intelligent network; and telephony information services, as well as leases and sells handset equipment and telephony information services. It also provides Internet and broadband multimedia services comprising internet service provider, portal and network, retail and wholesale broadband access, narrowband switched access, security, internet through fibre to the home, and voice over internet protocol services. In addition, the company offers leased line, virtual private network, fibre optics, web hosting and application, managed hosting, content delivery, outsourcing and application, desktop, and system integration and professional services. Further, the company offers wholesale services for telecommunication operators, including domestic interconnection and international wholesale services; leased lines for other operators; and local loop leasing services, as well as bit stream services, wholesale line rental accesses, and leased ducts for other operators' fiber deployment. Additionally, it provides video/TV services; smart connectivity and services, and consumer IoT products; financial and other payment, security, cloud, advertising, big data, and digital experience services; Aura; open gateway, living apps; smart Wi-Fi, Phoenix, NT, Solar 360, and Movistar Home devices. Telefónica, S.A. was incorporated in 1924 and is headquartered in Madrid, Spain.

About Uniti Group

Uniti Group, Inc. is a real estate investment trust company, which engages in the acquisition, construction, and leasing of properties. It operates through the following business segments: Uniti Leasing, Uniti Fiber, and Corporate. The Uniti Leasing segment involves mission-critical communications assets on exclusive or shared-tenant basis, and dark fiber network. The Uniti Fiber segment includes the operation of infrastructure solutions, cell site backhauls, and dark fiber. The Corporate segment consists of office and shared service functions. The company was founded in February 2014 and is headquartered in Little Rock, AR.