freenet (FNTN) AI Stock Analysis

• Market Cap: €3.50B
• Dividend Yield: 6.73%
• Average Volume (3M): 273.15K
• Price to Earnings (P/E): 13.0
• Beta (1Y): 0.48
• Revenue Growth: -0.62%
• EPS Growth: 16.87%
• Country: DE
• Employees: 3,196
• Sector: Communication Services
• Sector Strength: 97
• Industry: Telecommunications Services
• EPS (TTM): 0.68
• Shares Outstanding: 118,900,600
• 10 Day Avg. Volume: 242,957
• 30 Day Avg. Volume: 273,155
• PEG Ratio: 0.22
• Price to Book (P/B): 2.20
• Price to Sales (P/S): 1.32
• P/FCF Ratio: 10.01
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €32.38
• Price Target Upside: 9.84% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: €32.00 ▲(8.55% Upside)

freenet's strong financial performance, characterized by robust profitability and cash flow generation, is the most significant factor driving its score. The stock's fair valuation and attractive dividend yield further enhance its appeal. Technical indicators suggest a positive trend, although declining revenue growth remains a concern.

Positive Factors

Cash Generation

Strong cash generation capabilities indicate financial stability and operational efficiency, supporting long-term investments and shareholder returns.

Profitability

Improved profitability through higher net profit margins reflects effective cost management and pricing strategies, strengthening the company's competitive position.

Leverage Reduction

Reduced leverage enhances financial stability and flexibility, allowing the company to better weather economic fluctuations and invest in growth opportunities.

Negative Factors

Revenue Volatility

Revenue volatility can impact predictability and planning, potentially affecting long-term growth and investor confidence if not managed effectively.

Historical High Leverage

Past high leverage levels could pose risks if financial conditions change, potentially impacting the company's ability to meet obligations and fund operations.

Revenue Growth Challenges

Sluggish revenue growth may indicate market saturation or competitive pressures, requiring strategic initiatives to drive future growth and maintain market position.

freenet Business Overview & Revenue Model

Company Description

freenet AG provides telecommunications, radio and multimedia, mobile communications, mobile Internet, and digital lifestyle services in Germany. It provides a portfolio of services and products primarily in the areas of mobile voice and data services. The Mobile Communications segment offers mobile communications services, such as marketing of mobile communications services, which include voice and data services from the mobile communications network operators; sells and distributes mobile communications devices, as well as offers additional services for mobile data communications and digital lifestyle; and planning, construction, installation, and maintenance services for WiFi networks. The TV and Media segment provides services to end users in the field of DVB-T2 and IPTV; and planning, project management, installation, operation, service, and marketing services for broadcast-related solutions for business clients in the radio and media sectors. The Other/Holding segment offers portal services, such as e-commerce/advertising services; payment services; various digital products and entertainment formats for downloading and displaying, as well as use on mobile devices; communication development solutions, IT solutions, and other services; and voice and data services. The company provides its services under the mobilcom debitel, GRAVIS, MEDIA BROADCAST, klarmobile.de, freenet ENERGY, vitrado.de, FUNK, freenet BASICS, freenet MOBILE, freenet VIDEO, freenet.de, freenet FLEX, freenet TV, waipu.tv, CARMADA, The Cloud, and freenet Business brands. It operates approximately 520 mobilcom-debitel shops and 40 GRAVIS stores. The company sells its products through approximately 400 electronics stores, as well as online platforms. freenet AG was founded in 2005 and is headquartered in Büdelsdorf, Germany.

How the Company Makes Money

freenet generates revenue through multiple streams including subscription fees from mobile and broadband services, sales of hardware such as smartphones and routers, and digital content offerings. The company operates a variety of mobile network brands, which allows it to capture a wide customer base through tailored service packages. Additionally, freenet partners with content providers to offer bundled services that combine telecommunications with entertainment options, further driving revenue. Its strategic focus on enhancing customer experience and expanding service offerings contributes significantly to its financial performance.

freenet Financial Statement Overview

Summary

freenet demonstrates a strong financial performance with consistent revenue growth, improved profitability, and efficient cash flow management. The reduction in leverage enhances financial stability, although historical volatility in revenue and margins suggests the need for cautious management. The company's robust cash generation capabilities position it well for future growth and investment opportunities.

Income Statement

The income statement shows a solid performance with a consistent revenue growth rate of 2.03% in the TTM period, following a slight decline in the previous year. Gross profit margin remains strong at 39.32%, and net profit margin has improved to 10.46%, indicating enhanced profitability. EBIT and EBITDA margins are stable, reflecting efficient operational management. However, the previous year's revenue decline and fluctuating margins suggest some volatility.

Balance Sheet

The balance sheet reflects a healthy financial position with a low debt-to-equity ratio of 0.18 in the TTM period, significantly reduced from previous years. Return on equity is strong at 17.70%, indicating effective use of equity to generate profits. The equity ratio is stable, suggesting a balanced capital structure. However, the historical high leverage poses a potential risk if not managed carefully.

Cash Flow

Cash flow analysis reveals robust free cash flow growth of 7.65% in the TTM period, indicating strong cash generation capabilities. The operating cash flow to net income ratio is healthy, and the free cash flow to net income ratio is close to 0.90, reflecting efficient cash conversion. The consistent growth in free cash flow over the years highlights financial stability and operational efficiency.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	2.49B	2.48B	2.63B	2.56B	2.56B	2.58B
Gross Profit	996.07M	998.47M	709.47M	911.69M	876.29M	884.18M
EBITDA	554.30M	521.46M	500.74M	487.79M	404.24M	426.43M
Net Income	269.10M	246.80M	154.60M	79.30M	198.17M	190.51M
Balance Sheet
Total Assets	3.19B	3.34B	3.41B	3.63B	3.95B	4.51B
Cash, Cash Equivalents and Short-Term Investments	205.20M	181.60M	159.80M	193.17M	299.22M	680.25M
Total Debt	250.00M	697.10M	778.10M	928.11M	1.13B	1.48B
Total Liabilities	1.72B	1.86B	1.98B	2.16B	2.31B	2.68B
Stockholders Equity	1.47B	1.49B	1.44B	1.47B	1.64B	1.82B
Cash Flow
Free Cash Flow	361.10M	327.00M	342.40M	332.75M	318.99M	307.18M
Operating Cash Flow	401.40M	370.70M	398.00M	395.69M	367.21M	357.06M
Investing Cash Flow	1.10M	-42.30M	-55.30M	-71.89M	-44.13M	1.07B
Financing Cash Flow	-378.20M	-306.60M	-360.90M	-432.07M	-703.67M	-898.09M

freenet Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 29.48
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DE:FNTN, the sentiment is Positive. The current price of 29.48 is above the 20-day moving average (MA) of 29.25, above the 50-day MA of 28.30, and above the 200-day MA of 28.93, indicating a bullish trend. The MACD of 0.36 indicates Positive momentum. The RSI at 62.11 is Neutral, neither overbought nor oversold. The STOCH value of 57.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DE:FNTN.

freenet Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FNTN	75 Outperform	€3.50B	12.95	18.42%	6.73%	-0.62%	16.87%
DTE	67 Neutral	€138.89B	11.52	20.18%	3.28%	3.58%	103.26%
1U1	64 Neutral	€4.55B	35.77	2.07%	0.21%	-0.46%	-50.77%
UTDI	62 Neutral	€5.58B	39.47	2.15%	7.04%	-2.19%	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
PSM	45 Neutral	€1.11B	-187.35	-0.47%	1.03%	-4.06%	82.42%