Telefonica (TEF) AI Stock Analysis

• Market Cap: €25.65B
• Dividend Yield: 5.42%
• Average Volume (3M): 9.96M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.76
• Revenue Growth: 1.15%
• EPS Growth: 98.59%
• Country: ES
• Employees: 100,870
• Sector: Communication Services
• Sector Strength: 82
• Industry: Telecommunications Services
• EPS (TTM): -0.19
• Shares Outstanding: 5,670,161,600
• 10 Day Avg. Volume: 7,156,735
• 30 Day Avg. Volume: 9,956,118
• PEG Ratio: -7.50
• Price to Book (P/B): 1.30
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 4.96
• 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: €3.86
• Price Target Upside: -13.84% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 7

Telefonica's overall score reflects moderate financial performance marked by stable revenue but significant profitability challenges. The high leverage and negative net income weigh heavily on the score, despite a stable cash flow. Technical analysis indicates a bearish trend, while valuation is constrained by a negative P/E ratio, though the dividend yield offers some appeal. Addressing these financial and operational challenges is crucial for improving the stock's outlook.

Telefonica Business Overview & Revenue Model

Company Description

Telefónica, S.A., together with its subsidiaries, provides telecommunications services in Europe and Latin America. The company's mobile and related services and products comprise mobile voice, value added, mobile data and Internet, wholesale, corporate, roaming, fixed wireless, and trunking and paging services. Its fixed telecommunication services include 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. The company also provides Internet and broadband multimedia services comprising Internet service provider, portal and network, retail and wholesale broadband access, narrowband switched access, high-speed Internet through fibre to the home, and voice over Internet protocol services. In addition, it offers leased line, virtual private network, fibre optics, web hosting and application, outsourcing and consultancy, 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 computing, advertising, big data, and digital telco experience services; virtual assistants; digital home platforms; and Movistar Home devices. It also offers online telemedicine, home insurance, music streaming, and consumer loan services. The company was incorporated in 1924 and is headquartered in Madrid, Spain.

How the Company Makes Money

Telefónica generates revenue primarily through its telecommunications services, which include mobile and fixed-line voice and data services. The company earns significant income from subscription fees for mobile and broadband internet services, as well as from pay-TV offerings. Additionally, Telefónica capitalizes on digital services such as cloud computing, cybersecurity, and IoT solutions, which are increasingly contributing to its revenue streams. Key revenue streams are divided into consumer and business segments, with consumer services being the largest contributor. The company also forms strategic partnerships and alliances to enhance its offerings and expand its market reach, such as collaborations with technology firms to integrate advanced digital services. Furthermore, Telefónica benefits from its extensive geographical presence, allowing it to leverage economies of scale and optimize operational efficiencies.

Telefonica Financial Statement Overview

Summary

Telefonica shows moderate revenue growth but struggles with profitability, evident from the recent net loss. The balance sheet reflects high leverage, which could pose risks if not managed carefully. Cash flow generation is stable, yet there are concerns over growth and profitability sustainability. The company needs to address profitability and leverage to strengthen its financial position.

Income Statement

Telefonica's gross profit margin remained stable, with a slight increase in total revenue from the previous year. However, the net profit margin is negative due to a net loss, indicating challenges in profitability. The EBIT and EBITDA margins suggest moderate operational efficiency, but the negative net income is a concern.

Balance Sheet

The debt-to-equity ratio is high, reflecting significant leverage, but there is a notable increase in stockholders' equity. The equity ratio indicates a moderate proportion of assets financed by equity, providing some stability, albeit with potential risks from high debt levels.

Cash Flow

The free cash flow remains positive, but there is a lack of significant growth. The operating cash flow to net income ratio is unusable due to negative net income, suggesting cash generation issues relative to earnings. Free cash flow to net income ratio cannot be assessed due to the net loss.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
41.31B	40.65B	39.99B	39.28B	43.08B
	Gross Profit
28.76B	20.23B	27.05B	27.02B	30.06B
	EBIT
2.40B	2.59B	4.06B	13.59B	6.01B
	EBITDA
12.35B	10.34B	13.54B	22.53B	13.82B
	Net Income Common Stockholders
-49.00M	-892.00M	2.01B	8.14B	1.58B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.26B	7.67B	9.69B	12.41B	8.10B
	Total Assets
100.50B	104.32B	109.64B	109.21B	105.05B
	Total Debt
45.02B	44.12B	8.68B	8.07B	5.29B
	Net Debt
36.96B	36.96B	1.43B	-510.00M	-310.00M
	Total Liabilities
77.75B	77.23B	77.93B	80.53B	86.79B
	Stockholders Equity
19.35B	14.30B	25.09B	22.21B	11.23B
Cash Flow		Free Cash Flow
5.20B	5.49B	5.30B	4.10B	6.18B
	Operating Cash Flow
10.99B	11.65B	10.81B	10.27B	13.20B
	Investing Cash Flow
-5.22B	-4.29B	-5.33B	5.90B	-7.79B
	Financing Cash Flow
-4.67B	-7.19B	-7.92B	-12.99B	-5.44B

Telefonica Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4.48
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ES:TEF, the sentiment is Positive. The current price of 4.48 is above the 20-day moving average (MA) of 4.33, above the 50-day MA of 4.30, and above the 200-day MA of 4.14, indicating a bullish trend. The MACD of 0.07 indicates Negative momentum. The RSI at 58.83 is Neutral, neither overbought nor oversold. The STOCH value of 57.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ES:TEF.

Telefonica Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	60 Neutral	$13.44B	7.03	-2.73%	3.78%	2.17%	-39.43%
TEF	54 Neutral	€25.65B	―	-0.10%	5.42%	1.15%	98.59%

Telefonica Corporate Events

Telefónica Sells Majority Stake in Telefónica del Perú to Integra

Telefónica Hispanoamérica, a subsidiary of Telefónica, has sold its 99.3% stake in Telefónica del Perú to Integra Tec International Inc., along with financial credits related to a commercial credit agreement. This transaction, valued at approximately 3.7 million Peruvian soles, aligns with Telefónica’s strategy to reduce its exposure in Latin America. The sale is part of Telefónica’s asset management policy and includes a public tender offer for minority shareholders. The transaction coincides with Telefónica del Perú’s ongoing insolvency procedure, pending approval by INDECOPI.

Telefónica’s Shareholders Approve Board’s Proposals at Annual Meeting

Telefónica, S.A. held its General Shareholders’ Meeting where all proposals by the Board of Directors were approved. Key decisions included the re-election of Mr. Marc Thomas Murtra Millar as Executive Chairman and Mr. Emilio Gayo Rodríguez as Chief Operating Officer, among other appointments, indicating a continuity in leadership and strategic direction.

Telefonica Announces 2025 Dividend Distribution Plan

Telefonica has announced a cash dividend distribution to its shareholders, which will be paid in two installments during 2025. This decision reflects the company’s commitment to returning value to its shareholders and may impact its financial planning and market perception.

Telefónica to Sell Stake in Colombia Telecom to Millicom for $400 Million

Telefónica Hispanoamérica, a subsidiary of Telefónica, S.A., has agreed to sell its 67.5% stake in Colombia Telecomunicaciones S.A. E.S.P. BIC to Millicom Spain, S.L. for $400 million. This transaction is part of Telefónica’s strategy to reduce its exposure in Hispanoamérica, aligning with its asset portfolio management policy, and is pending regulatory approvals and agreements in Colombia.

Telefónica and Vodafone Finalize Joint Venture for Fiber Network Expansion

Telefónica has finalized a joint venture with Vodafone España to establish Compañía Mayorista de Fibra, S.L., aimed at commercializing a fiber to the home network. This venture, set to begin operations on March 1, 2025, will cover 3.65 million real estate units and initially serve around 1.4 million customers, enhancing Telefónica’s market position and network reach.

Telefónica Registers 2024 Annual Report with SEC

Telefónica has registered its annual report for the fiscal year 2024 with the U.S. Securities and Exchange Commission, making it accessible to shareholders and investors. This move underscores Telefónica’s commitment to transparency and regulatory compliance, potentially enhancing investor confidence and reinforcing its market position.

Telefónica Announces 2024 Financial Results with Focus on Regional Management

Telefónica has released its financial information for the year ending December 2024, prepared under the International Financial Reporting Standards (IFRS). The company emphasizes its regional and integrated management model, which presents operating results independently of legal structures. This approach excludes intra-company billing from operating results, ensuring a clear view of each unit’s performance. The results will be officially presented on February 27, 2025.

Telefónica Emphasizes Sustainability and Governance in Latest Financial Results

Telefónica’s latest financial results presentation highlights the company’s strategic focus on sustainability and governance, as well as its commitment to transparency in financial reporting. The release underscores the company’s ongoing efforts to navigate competition and regulatory challenges in the telecommunications sector, while also addressing its environmental and social responsibilities.

Telefónica Appoints New Director Following Board Vacancy

Telefónica’s Board of Directors has appointed Mr. Olayan Alwetaid as a new Director, representing the shareholder Green Bridge Investment Company SCS / Stc Group, following the passing of Vice President José Javier Echenique Landiríbar. This appointment is expected to maintain stability and continuity in the company’s governance structure.

Telefónica Announces Board and Committee Restructuring

Telefónica has announced significant changes to its Board of Directors and its committees. The company accepted the resignation of Mr. Francisco José Riberas Meras and appointed Ms. Ana María Sala Andrés as an Independent Director. Additionally, Mr. Carlos Ocaña Orbis has been appointed as Vice President of the Board. These changes are part of an ongoing renewal process aimed at enhancing governance and strategic oversight.

Telefónica Sells Argentine Operations to Telecom Argentina

Telefónica has sold its entire stake in Telefónica Móviles Argentina S.A. to Telecom Argentina S.A. for approximately 1.245 billion US dollars. This move aligns with Telefónica’s strategy to decrease its presence in Latin America, reflecting its broader asset management policy.

Telefónica del Perú Enters Insolvency Process for Financial Restructuring

Telefónica del Perú has entered an Ordinary Insolvency Procedure to restructure its financial liabilities, as approved by its Board of Directors. This move is part of a broader strategy to manage the company’s challenging financial situation, exacerbated by long-standing tax contingencies and competitive disadvantages. Telefónica Hispanoamérica has extended a commercial credit to support operational needs, and Telefónica continues to seek strategic alternatives for its investment in the Peruvian subsidiary.