Comparing Telefónica Deutschland (OTCMKTS:TELDF) and KT (NYSE:KT)

KT (NYSE:KT) and Telefónica Deutschland (OTCMKTS:TELDF) are both communication services companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, risk, profitability, institutional ownership, valuation, earnings and analyst recommendations.

Insider & Institutional Ownership

18.9% of KT shares are owned by institutional investors. Comparatively, 9.3% of Telefónica Deutschland shares are owned by institutional investors. 1.0% of KT shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares KT and Telefónica Deutschland”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KT	$19.88 billion	0.46	$1.20 billion	$2.26	8.36
Telefónica Deutschland	N/A	N/A	N/A	($0.00)	-17,538.76

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

Profitability

This table compares KT and Telefónica Deutschland’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KT	5.51%	8.04%	3.63%
Telefónica Deutschland	N/A	N/A	N/A

Analyst Recommendations

This is a breakdown of recent ratings for KT and Telefónica Deutschland, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KT	0	3	0	0	2.00
Telefónica Deutschland	0	0	0	0	0.00

KT currently has a consensus target price of $23.08, indicating a potential upside of 22.12%. Given KT’s stronger consensus rating and higher possible upside, analysts clearly believe KT is more favorable than Telefónica Deutschland.

Dividends

KT pays an annual dividend of $1.04 per share and has a dividend yield of 5.5%. Telefónica Deutschland pays an annual dividend of $0.27 per share and has a dividend yield of 11.7%. KT pays out 46.0% of its earnings in the form of a dividend. Telefónica Deutschland pays out -205,565.9% 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. Telefónica Deutschland is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

KT beats Telefónica Deutschland on 10 of the 12 factors compared between the two stocks.

About KT

KT Corporation provides integrated telecommunications and platform services in Korea and internationally. The company offers mobile voice and data telecommunications services based on 5G, 4G LTE and 3G W-CDMA technology; fixed-line telephone services, including local, domestic long-distance, international long-distance, and voice over Internet protocol telephone services, as well as interconnection services; broadband Internet access service and other Internet-related services; and data communication services, such as fixed-line and leased line services, as well as broadband Internet connection services. It also provides media and content services, including IPTV, satellite TV, digital music, e-commerce, online advertising consulting, and web comics and novels services; and credit card processing and other financial services. In addition, the company offers information technology and network services, and satellite services; sells handsets and miscellaneous telecommunications equipment; develops and sells residential units and commercial real estate; and rents real estate properties. Further, it maintains public telephones; offers security, B2C and B2B, investment fund, software development and data processing, value added network, call center, system integration and maintenance, marketing, PCS distribution, truck transportation and trucking arrangement business, cloud system implementation, satellite communication network, installation and management, and data center development and related services. Additionally, the company is involved in the Internet banking ASP and security solutions, residential building development and supply, sports team management, technology business finance, and submarine cable construction and maintenance businesses. The company was formerly known as Korea Telecom Corp. and changed its name to KT Corporation in March 2002. KT Corporation was founded in 1981 and is headquartered in Seongnam-si, South Korea.

About Telefónica Deutschland

Telefónica Deutschland Holding AG, together with its subsidiaries, provides integrated telecommunication services to private and business customers in Germany. It offers fiber-to-the-home lines; broadband services, consisting of VDSL, cable, fiber, and fixed mobile substitution services; and machine to machine communication and managed connectivity services. The company offers digital services in the fields of Internet of Things, as well as O2 Tv and O2 cloud. In addition, it provides access to infrastructure and services for its wholesale partners. Further, the company provides its products and services through a network of independently operated franchise and premium partner shops, and online and telesales channels, as well as indirect selling channels, such as partnerships and co-operations with retailers. It markets its products and services under the O2, Blau, AY YILDIZ, Ortel Mobile, and Telefonica brand names. The company was formerly known as Telefónica Germany Verwaltungs GmbH and changed its name to Telefónica Deutschland Holding AG in September 2012. The company is based in Munich, Germany. Telefónica Deutschland Holding AG operates as a subsidiary of Telefonica Germany Holdings Limited.