Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Spanish telecom giant Telefonica (NYSE: TEF ) has earned a coveted five-star ranking.
With that in mind, let's take a closer look at Telefonica's business and see what CAPS investors are saying about the stock right now.
||Integrated telecommunication services
CEO Cesar Izuel (since 2000)
CFO Santiago Valbuena (since 2002)
|Return on Equity (average, past 3 years)
||$11.97 billion / $84.65 billion
Vodafone Group (Nasdaq: VOD )
America Movil (NYSE: AMX )
France Telecom (NYSE: FTE )
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 96% of the 544 members who have rated Telefonica believe the stock will outperform the S&P 500 going forward. These bulls include ner25 and All-Star TMFDeej, who is ranked in the top 1% of our community.
This past summer, ner25 likened Telefonica to another Madrid-based bargain opportunity: "Similar play to Banco Santander (NYSE: STD ) , a Spanish stock trading cheaply because of Spanish economy fears, but with most of its business in other parts of Europe and South America."
While Telefonica's shares have rebounded nicely over the past four months, our community thinks they're still worth paying for. In fact, Telefonica's three-year average return on equity (45%) tops that of European rivals Vodafone (7.6%) and France Telecom (14%), its fiercest Latin American foe America Movil (41%), and even U.S.-based counterparts Verizon (NYSE: VZ ) (8.4%) and AT&T (NYSE: T ) (14.4%). With the Spanish market accounting for just 35% of Telefonica's business, CAPS All-Star TMFDeej thinks the company is in far better shape than many investors realize:
Yes, the Spanish economy is a mess. The official unemployment rate there of 20% makes the 10% that we're experiencing here in the United States today look like a utopia. ...
Since Spain is such a mess, why would I want to buy stock in a company from there? Even though [Telefonica] is a Spanish company, it derives nearly two-thirds of its revenue from outside of the country. A huge chunk of that comes from its rapidly growing operations in Latin America. ...
Cheap companies that pay dividends always catch my eye. Telefonica has both of these attributes.
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