Balance sheet: Nokia Corporation (ADR) (NYSE:NOK)’s debt is equivalent to 70% of its equity. The company has a fair amount of liquid assets, with a current ratio of 1.4 and a quick ratio of 1.1. As of the end of December 2012, it sat on nearly $12 billion in cash, with just under $7 billion in long-term debt.
Vodafone has a better debt-to-equity ratio of 0.51, but not the same level of liquidity as Nokia, with both a current and quick ratio of 0.7.
Dividend and yield: Vodafone’s current annual dividend of $1.02 yields 3.3%, which is about what it has averaged over the last five years. Nokia currently does not pay a dividend.
Below is one exchange traded fund that features Nokia Corporation (ADR) (NYSE:NOK) and Vodafone:
iShares S&P Global Telecommunications
This fund corresponds with the S&P Global Telecommunications Sector Index, which measures the performance of companies that Standard & Poor’s. It holds 39 stocks, with Vodafone Group Plc (ADR) (NASDAQ:VOD) its third largest holding at 11.9%. It has an expense ratio of 0.48%. The fund has returned 11.21% year-to-date, 16.73% over the last year, 11.90% annualized over the last three years, 2.3% annualized over the last five years, and 8.9% annualized over the last 10 years.
Given Nokia Corporation (ADR) (NYSE:NOK)’s struggles over the last few years, many are skeptical about its future success. Additionally, strong competition, including Apple Inc. (NASDAQ:AAPL) and Research In Motion Ltd (NASDAQ:BBRY), could prove to be an insurmountable challenge. Vodafone, on the other hand, has room to grow, as it is a data provider, and could potentially look to expand into developing countries. With analysts upbeat, a better yield, and a decent valuation, Vodafone looks like the better choice here. However, as always, the final decision depends on your portfolio, risk tolerance, and personal preferences, and the ETF is always a great alternative for those who do not want to choose a specific company.
The article Telecom Showdown originally appeared on Fool.com and is written by Daniel Murray.
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