Telefonica (TEF) AI Stock Analysis

• Market Cap: €20.97B
• Dividend Yield: 7.54%
• Average Volume (3M): 7.73M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.67
• Revenue Growth: -7.15%
• EPS Growth: -79.58%
• Country: ES
• Employees: 100,870
• Sector: Services
• Sector Strength: N/A
• Industry: Telecommunications Services
• EPS (TTM): 0.09
• Shares Outstanding: 5,670,161,600
• 10 Day Avg. Volume: 9,593,306
• 30 Day Avg. Volume: 7,727,065
• PEG Ratio: 6.31
• Price to Book (P/B): 1.15
• Price to Sales (P/S): 0.54
• P/FCF Ratio: 4.27
• 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: €4.01
• Price Target Upside: 8.09% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 49 Neutral
• Price Target: €3.50 ▼(-5.66% Downside)

Telefonica's overall stock score is primarily impacted by its financial performance challenges, including declining revenue growth and profitability pressures. The technical analysis indicates a bearish trend, further weighing on the score. Despite these challenges, the high dividend yield offers some support to the valuation score.

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

Telefonica generates revenue primarily through its core telecommunications services, including mobile and fixed-line voice services, broadband internet, and pay television subscriptions. The company's revenue model is diversified across several key streams: mobile service revenue, which includes voice, SMS, and data services; fixed-line services, comprising broadband and traditional telephony; and digital services, such as cloud computing and cybersecurity solutions. Additionally, Telefonica has established strategic partnerships with technology firms and content providers, enhancing its service offerings and creating additional revenue opportunities. The company also benefits from economies of scale and a broad customer base, which contribute to its financial stability.

Telefonica Financial Statement Overview

Summary

Telefonica's financial statements present a mixed picture. The company shows strong gross profit margins and manageable leverage, but faces challenges with negative net income and profitability. Revenue growth has been negative, impacting overall performance. Cash flow generation is a positive aspect, with improvements in free cash flow. The company needs to address profitability issues to enhance its financial health.

Income Statement

Telefonica's income statement shows a mixed performance. The company has experienced a decline in revenue growth, with a negative growth rate of -3.62% in the TTM period. The gross profit margin remains strong at 100%, indicating efficient cost management. However, the net profit margin is negative, reflecting ongoing profitability challenges. EBIT and EBITDA margins are moderate, suggesting some operational efficiency but room for improvement.

Balance Sheet

The balance sheet reveals a moderate debt-to-equity ratio of 0.44 in the TTM period, indicating manageable leverage. However, the return on equity is negative, highlighting profitability issues. The equity ratio is stable, suggesting a solid asset base relative to equity. Overall, the balance sheet shows stability but with profitability concerns.

Cash Flow

Cash flow analysis indicates a positive free cash flow growth rate of 10.60% in the TTM period, reflecting improved cash generation. The operating cash flow to net income ratio is healthy, suggesting strong cash flow relative to earnings. However, the free cash flow to net income ratio indicates challenges in converting earnings to free cash flow. Overall, cash flow performance is solid with some areas for improvement.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	38.27B	41.31B	40.65B	39.99B	39.28B	43.08B
Gross Profit	32.04B	28.76B	20.23B	27.05B	27.02B	30.06B
EBITDA	14.30B	12.35B	10.34B	14.79B	22.53B	13.82B
Net Income	-2.12B	-49.00M	-892.00M	2.01B	8.14B	1.58B
Balance Sheet
Total Assets	92.57B	100.50B	104.32B	109.64B	109.21B	105.05B
Cash, Cash Equivalents and Short-Term Investments	4.39B	9.26B	7.67B	9.69B	12.41B	8.10B
Total Debt	42.90B	45.02B	44.35B	8.68B	50.37B	50.85B
Total Liabilities	71.22B	77.75B	77.23B	77.93B	80.53B	86.79B
Stockholders Equity	17.61B	19.35B	14.30B	25.09B	22.21B	11.23B
Cash Flow
Free Cash Flow	4.76B	5.20B	5.49B	5.30B	4.10B	6.18B
Operating Cash Flow	10.76B	10.99B	11.65B	10.81B	10.27B	13.20B
Investing Cash Flow	-5.64B	-5.22B	-4.29B	-5.33B	5.90B	-7.79B
Financing Cash Flow	-7.02B	-4.67B	-7.19B	-7.92B	-12.99B	-5.44B

Telefonica Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 3.71
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Neutral. The current price of 3.71 is above the 20-day moving average (MA) of 3.67, below the 50-day MA of 4.00, and below the 200-day MA of 4.32, indicating a neutral trend. The MACD of -0.08 indicates Negative momentum. The RSI at 44.81 is Neutral, neither overbought nor oversold. The STOCH value of 56.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ES:TEF.

Telefonica Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	55 Neutral	$13.29B	17.42	10.03%	0.93%	7.13%	-12.93%
TEF	49 Neutral	€20.97B	-10.05	-0.90%	7.54%	-7.15%	-79.58%