Telefonica (TEF) AI Stock Analysis

• Market Cap: €25.93B
• Dividend Yield: 5.17%
• Average Volume (3M): 11.30M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.74
• Revenue Growth: -1.34%
• EPS Growth: -181.23%
• Country: ES
• Employees: 100,870
• Sector: Communication Services
• Sector Strength: 82
• Industry: Telecommunications Services
• EPS (TTM): 0.08
• Shares Outstanding: 5,670,161,600
• 10 Day Avg. Volume: 12,233,183
• 30 Day Avg. Volume: 11,300,263
• PEG Ratio: -0.12
• Price to Book (P/B): 0.78
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 3.67
• 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: €4.04
• Price Target Upside: -14.59% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 8

• Rating: 54 Neutral
• Price Target: ―

Telefonica's stock faces challenges primarily from financial performance issues, including negative net income and declining revenue. While technical indicators show some positive momentum, and the high dividend yield is appealing, these factors are overshadowed by the company's profitability and valuation concerns.

Positive Factors

Debt Management

Net debt is 2% lower than expectations.

Revenue Performance

Q1 revenue is 1.3% ahead of consensus with Other and eliminations, Germany, and Hispam as main contributors.

Negative Factors

Dividend Expectations

The 2025 dividend per share was in line with expectations.

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 faces profitability challenges and declining revenue, with a negative net income and declining free cash flow growth. Despite reasonable operational efficiency and manageable debt levels, these issues weigh heavily. A stable cash position provides some cushion, but improvements in revenue and profitability are needed.

Income Statement

Telefonica's income statement shows mixed performance. The TTM gross profit margin is approximately 69.5%, which is strong, yet the net profit margin is negative due to a net loss, indicating profitability challenges. Revenue has decreased over the last year, with a negative revenue growth rate of about -2.2%, suggesting declining sales. The EBIT margin stands at 6.1%, and the EBITDA margin is 30.7%, indicating reasonable operational efficiency despite the net loss.

Balance Sheet

The balance sheet reflects moderate financial stability. The debt-to-equity ratio is low at approximately 0.39, indicating manageable debt levels relative to equity. However, the company's return on equity is negatively impacted by the net loss. The equity ratio is 19.9%, suggesting a moderate reliance on equity financing. Overall, the balance sheet shows stability but highlights concerns regarding profitability.

Cash Flow

The cash flow statement indicates a stable cash position with an operating cash flow to net income ratio that is strong due to positive operating cash flows despite negative net income. The free cash flow to net income ratio is also favorable. However, the free cash flow growth rate is negative, reflecting challenges in increasing cash generation from operations.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
40.40B	41.31B	40.65B	39.99B	39.28B	43.08B
	Gross Profit
28.07B	28.76B	20.23B	27.05B	27.02B	30.06B
	EBIT
2.46B	2.40B	2.59B	4.06B	13.59B	6.01B
	EBITDA
12.39B	12.35B	10.34B	13.54B	22.53B	13.82B
	Net Income Common Stockholders
-1.89B	-49.00M	-892.00M	2.01B	8.14B	1.58B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
10.15B	9.26B	7.67B	9.69B	12.41B	8.10B
	Total Assets
99.01B	100.50B	104.32B	109.64B	109.21B	105.05B
	Total Debt
7.79B	45.02B	44.12B	8.68B	8.07B	50.85B
	Net Debt
733.00M	36.96B	36.96B	1.43B	-510.00M	45.25B
	Total Liabilities
75.35B	77.75B	77.23B	77.93B	80.53B	86.79B
	Stockholders Equity
19.72B	19.35B	14.30B	25.09B	22.21B	11.23B
Cash Flow		Free Cash Flow
4.84B	5.20B	5.49B	5.30B	4.10B	6.18B
	Operating Cash Flow
10.62B	10.99B	11.65B	10.81B	10.27B	13.20B
	Investing Cash Flow
-4.97B	-5.22B	-4.29B	-5.33B	5.90B	-7.79B
	Financing Cash Flow
-4.73B	-4.67B	-7.19B	-7.92B	-12.99B	-5.44B

Telefonica Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4.73
• 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 ES:TEF, the sentiment is Positive. The current price of 4.73 is above the 20-day moving average (MA) of 4.65, above the 50-day MA of 4.46, and above the 200-day MA of 4.22, indicating a bullish trend. The MACD of 0.05 indicates Positive momentum. The RSI at 64.67 is Neutral, neither overbought nor oversold. The STOCH value of 42.15 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 *	61 Neutral	$14.74B	5.90	-4.02%	6.40%	2.72%	-31.67%
TEF	54 Neutral	€25.93B	―	-0.55%	5.17%	-1.34%	-181.23%
4HW		€68.48M	―		―	―	―
LLN		€18.76M	20.19	25.01%	―	―	―

Telefonica Corporate Events

Telefónica Sells Stake in Uruguayan Unit to Millicom for $440 Million

Telefónica has announced the sale of its entire stake in Telefónica Móviles del Uruguay S.A. to Millicom Spain, S.L. for USD 440 million. This move is part of Telefónica’s strategy to manage its asset portfolio and reduce its exposure in the Latin American market, pending regulatory approvals.

The most recent analyst rating on (ES:TEF) stock is a Hold with a EUR4.00 price target. To see the full list of analyst forecasts on Telefonica stock, see the ES:TEF Stock Forecast page.

Telefonica Reports Q1 2025 Financial Results

Telefonica has released its financial results for the first quarter of 2025, prepared under the International Financial Reporting Standards. The company emphasizes its regional and integrated management model, which allows for the independent presentation of operational results by business units, excluding inter-company billing. This approach aims to provide a clearer view of the company’s performance, solvency, and liquidity, without affecting the consolidated results.

The most recent analyst rating on (ES:TEF) stock is a Hold with a EUR4.00 price target. To see the full list of analyst forecasts on Telefonica stock, see the ES:TEF Stock Forecast page.

Telefónica Highlights Strategic Focus Amid Market Challenges

Telefónica’s recent financial results presentation highlights the company’s strategic focus on navigating competitive telecommunications markets. The release underscores the company’s commitment to sustainability and governance, while also addressing potential risks and uncertainties that could impact future operations.

The most recent analyst rating on (ES:TEF) stock is a Hold with a EUR4.00 price target. To see the full list of analyst forecasts on Telefonica stock, see the ES:TEF Stock Forecast page.

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.