Eutelsat Communications (ETL) AI Stock Analysis

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Eutelsat Communications

(OTC:ETL)

Rating:47Neutral

Price Target:

€3.00

▲(20.97%Upside)

Eutelsat Communications' overall score is constrained by declining revenue and profitability, as well as weak technical indicators. While there are strategic initiatives underway, such as the LEO constellation expansion, financial challenges like high leverage and goodwill impairments weigh heavily on the score. The stock's valuation is unattractive, and technical analysis suggests bearish momentum.

Positive Factors

Debt Costs

Debt costs have fallen materially, impacting Eutelsat shares positively.

Government Funding

The scale and speed of the shift in European governments’ stance on defence/satellite funding has exceeded expectations.

Loan Fund Proposal

Eutelsat shares have risen materially due to a proposal to establish a loan fund to support European defence spend.

Negative Factors

Competitive Pressure

There are rising competitive pressures from global satellite players, including Starlink.

Revenue Opportunity Uncertainty

There are still material uncertainties as to the potential revenue opportunity for Eutelsat.

Valuation Risks

There is further downside risk to Eutelsat's valuation from execution on capital expenditures and rising debt.

Eutelsat Communications (ETL) vs. iShares MSCI France ETF (EWQ)

Market Cap

$1.17B

Dividend YieldN/A

Average Volume (3M)1.57M

Price to Earnings (P/E)―

Beta (1Y)0.73

Revenue Growth10.31%

EPS Growth-494.84%

CountryFR

Employees1,514

SectorTechnology

Sector Strength84

IndustryCommunication Equipment

Share Statistics

EPS (TTM)-1.84

Shares Outstanding475,178,380

10 Day Avg. Volume2,186,777

30 Day Avg. Volume1,573,893

Financial Highlights & Ratios

PEG Ratio0.17

Price to Book (P/B)0.50

Price to Sales (P/S)0.00

P/FCF Ratio3.39

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$2.83

Price Target Upside14.12% Upside

Rating ConsensusModerate Sell

Number of Analyst Covering3

Eutelsat Communications Business Overview & Revenue Model

Company DescriptionEutelsat Communications S.A. engages in the operation of telecommunication satellites for the digital communications markets. It provides video services, such as broadcast DTH, distribution, HD and ultra HD channels, and occasional use services; connectivity services; and Internet of Things and low earth orbit solutions. The company offers its services under the Eutelsat brand directly and through distributors. As of June 30, 2021, it operated 38 satellites in geostationary orbit. The company serves broadcasters, companies, telecom operators, individuals, and government agencies in France, Italy, the United Kingdom, rest of Europe, the Americas, the Middle East, Africa, Asia, and internationally. The company was founded in 1977 and is headquartered in Issy-les-Moulineaux, France.

How the Company Makes MoneyEutelsat Communications generates revenue through leasing satellite capacity to various customers across multiple sectors. Its primary revenue streams include video services, where it provides broadcasting capabilities to television and radio networks, and data services, which involve offering broadband connectivity to internet service providers and telecommunications companies. Additionally, Eutelsat earns income from government services by supplying secure communication solutions for military and institutional clients. The company also benefits from strategic partnerships and joint ventures, which expand its market reach and enhance its service offerings. Key factors contributing to its earnings include long-term contracts with customers, a diversified portfolio of services, and investments in advanced satellite technology to maintain a competitive edge.

Eutelsat Communications Earnings Call Summary

Earnings Call Date:Feb 14, 2025

(Q2-2025)

% Change Since: 44.27%|

Next Earnings Date:Aug 05, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with significant strategic achievements such as the expansion of the LEO constellation and strong growth in Government Services and Fixed Connectivity segments. However, these were offset by major financial challenges, including a substantial goodwill impairment, declining Video revenues, and a significant net income loss. The company is also facing increased competition and financial leverage challenges.

Q2-2025 Updates

Positive Updates

LEO Constellation Expansion

Eutelsat procured the first batch of 100 LEO satellites required for the Iris2 multi-orbit constellation, with plans for an additional 340 satellites, marking significant progress in their LEO build-out strategy.

Government Services and Fixed Connectivity Growth

Government Services and Fixed Connectivity revenues rose by 21.9% and 22% year-on-year, respectively, indicating strong demand in these segments.

Cost Control and CapEx Reduction

Gross CapEx is now expected to be between €500 million and €600 million, lower than the initially guided range of €700 million to €800 million, due to timing of LEO investments and vigilance on GEO expenditures.

Strategic Partnership and Transaction

Eutelsat exercised the put option for the sale of a majority stake in passive ground infrastructure, expected to deliver net proceeds of around €500 million in 2026.

Negative Updates

Goodwill Impairment

Eutelsat took a goodwill impairment of €535 million on various GEO assets due to lower expected future cash flows, reflecting increased competition and a decline in demand for Video services.

Video Revenue Decline

Video segment revenues, representing 51% of total revenues, declined by 6.4% year-on-year, in line with the secular market decline.

Net Income Loss

Group share of net income showed a loss of €873.2 million, significantly higher than the loss of €191.3 million a year earlier, due to higher operating expenses and goodwill impairment.

High Net Debt

Net debt stood at €2,695.8 million, with a net debt-to-adjusted EBITDA ratio of 3.92 times, indicating increased financial leverage.

Company Guidance

During the call, Eutelsat Group provided guidance on several key financial metrics and strategic initiatives. For the first half of the fiscal year 2024-2025, Eutelsat reported total revenues of €606 million, a 5.9% increase on a reported basis and a 4.4% increase like-for-like. The operating vertical revenues amounted to €600 million, up 3.9% like-for-like, with an adjusted EBITDA margin of 55.1%. The net debt to adjusted EBITDA ratio was 3.92 times. The company confirmed its full-year revenue and EBITDA margin objectives, albeit with reduced headroom. Eutelsat expects gross CapEx to be between €500 million and €600 million, down from an earlier guidance of €700 million to €800 million, reflecting timing adjustments in LEO investments and increased vigilance on GEO expenditures. Additionally, Eutelsat announced a goodwill impairment of €535 million on GEO assets due to lower expected cash flows. Strategically, the company highlighted the signing of the Iris2 multi-orbit constellation agreement and plans to invest around €2 billion in the project, with a back-end loaded contribution. Eutelsat aims to leverage its strategic initiatives, including a put option for its passive ground infrastructure, to strengthen its financial resources and support its LEO constellation expansion.

Eutelsat Communications Financial Statement Overview

Summary

Eutelsat Communications faces challenges with declining revenue and profitability, reflected in negative growth rates and net losses. Despite a high gross profit margin, operating inefficiencies have eroded income margins. The balance sheet is moderately leveraged, providing some stability. Cash flow generation is positive, though growth has slowed, indicating the need to address inefficiencies to improve profitability.

Income Statement

Neutral

Eutelsat Communications has experienced a decline in revenue with a negative growth rate over the past year. The gross profit margin remains high at approximately 83.07% for the most recent year, indicating efficient production processes. However, the company has reported a negative EBIT and net profit margin, reflecting operating inefficiencies and net losses due to high expenses.

Balance Sheet

Neutral

The balance sheet shows that Eutelsat Communications has a relatively stable equity base with a debt-to-equity ratio of 0.88, indicating moderate financial leverage. The equity ratio is approximately 45.20%, suggesting a balanced capital structure. However, the company's total assets have increased marginally, which might indicate limited growth in asset utilization.

Cash Flow

Neutral

Eutelsat Communications has a positive free cash flow, although the growth rate has been negative compared to previous years. The operating cash flow to net income ratio is unreliable due to negative net income, but the operating cash flow remains robust, demonstrating good cash generation capability. However, the decline in free cash flow growth is a point of concern.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
1.25B	1.21B	1.13B	1.15B	1.23B	1.28B
	Gross Profit
1.01B	1.01B	572.50M	576.70M	631.50M	657.70M
	EBIT
-846.50M	-191.30M	369.80M	379.90M	414.20M	451.00M
	EBITDA
602.60M	525.80M	1.01B	911.80M	833.00M	1.01B
	Net Income Common Stockholders
-991.90M	-309.90M	314.90M	230.80M	214.10M	297.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
709.10M	843.90M	482.20M	680.50M	861.10M	832.00M
	Total Assets
7.62B	8.52B	7.41B	7.57B	7.28B	7.58B
	Total Debt
3.35B	3.38B	3.23B	3.44B	3.54B	3.82B
	Net Debt
2.66B	2.54B	2.74B	2.76B	2.68B	2.99B
	Total Liabilities
4.56B	4.57B	4.34B	4.71B	4.59B	4.78B
	Stockholders Equity
2.99B	3.85B	2.98B	2.78B	2.61B	2.66B
Cash Flow		Free Cash Flow
-124.70M	42.40M	438.60M	545.40M	625.60M	475.50M
	Operating Cash Flow
345.90M	505.60M	639.60M	722.60M	809.00M	695.80M
	Investing Cash Flow
-391.60M	90.40M	-348.40M	-583.00M	-192.10M	-114.70M
	Financing Cash Flow
-160.50M	-242.20M	-487.20M	-335.00M	-581.30M	-1.20B

Eutelsat Communications Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.48

Price Trends

50DMA

3.61

Negative

100DMA

3.36

Negative

200DMA

3.38

Negative

Market Momentum

MACD

-0.32

Positive

RSI

30.93

Neutral

STOCH

11.07

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FR:ETL, the sentiment is Negative. The current price of 2.48 is below the 20-day moving average (MA) of 3.24, below the 50-day MA of 3.61, and below the 200-day MA of 3.38, indicating a bearish trend. The MACD of -0.32 indicates Positive momentum. The RSI at 30.93 is Neutral, neither overbought nor oversold. The STOCH value of 11.07 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FR:ETL.

Eutelsat Communications Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	62 Neutral	$11.93B	10.60	-7.51%	3.00%	7.40%	-8.09%
ETL	47 Neutral	$1.17B	―	-28.35%	―	10.31%	-494.84%
0QVW		€47.19M	―	-15.03%	―	―	―
0QSV		€127.05M	―	-6.01%	―	―	―
0N9W		€32.29M	16.78	7.81%	5.11%	―	―
0OPY		€308.57M	―	-18.17%	―	―	―
ALBPK		€19.19M	―		―	―	―

* Technology Sector Average

Performance Comparison

FR:ETL

Eutelsat Communications

2.48

-1.27

-33.86%

GB:0QVW

Ateme SA

4.09

-1.81

-30.68%

GB:0QSV

Ekinops

4.76

0.82

20.81%

GB:0N9W

Netgem SA

0.98

0.06

6.52%

GB:0OPY

Parrot SA

10.05

7.95

378.57%

FR:ALBPK

Broadpeak SA

1.60

-0.70

-30.43%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.