Telefonica (TEF) AI Stock Analysis

• Market Cap: $30.27B
• Dividend Yield: 6.65%
• Average Volume (3M): 614.97K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.05
• Revenue Growth: -4.73%
• EPS Growth: -251.31%
• Country: US
• Employees: 100,870
• Sector: Communication Services
• Sector Strength: 96
• Industry: Telecommunications Services
• EPS (TTM): 0.08
• Shares Outstanding: 5,670,161,600
• 10 Day Avg. Volume: 544,230
• 30 Day Avg. Volume: 614,970
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 2.81
• Enterprise Value/Revenue: 2.19
• Enterprise Value/Gross Profit: 2.19
• Enterprise Value/Ebitda: 6.75
• 1Y Price Target: $5.50
• Price Target Upside: 2.61% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 60 Neutral
• Price Target: $5.50 ▲(2.61% Upside)

The overall stock score of 59.8 reflects significant profitability challenges despite stable cash flows and reasonable leverage. Technical analysis and valuation present mixed signals, with a high dividend yield providing some appeal. The earnings call adds a positive aspect, highlighting strategic focus and market performance, albeit with some noted challenges.

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 primarily generates revenue through its telecommunications services, which include mobile and fixed-line voice services, broadband internet access, and television services. The company has a diverse revenue model, with key revenue streams coming from mobile services, including voice and data plans, as well as fixed broadband subscriptions. Additionally, Telefonica earns from value-added services such as cloud solutions, cybersecurity, and Internet of Things (IoT) offerings. Significant partnerships with technology providers and content creators further enhance its service portfolio and drive revenue growth. The company's strategic focus on digital services and customer retention initiatives, along with cost optimization strategies, also contribute positively to its overall earnings.

Telefonica Financial Statement Overview

Summary

Telefonica's financial statements show stable cash flows and reasonable leverage, but there are significant profitability issues. The income statement reports negative net income despite stable gross margins, while the balance sheet indicates negative equity returns despite balanced leverage. Cash flow performance is strong, signaling effective cash management, yet profitability remains a critical concern.

Income Statement

Telefonica's TTM revenue has declined compared to the previous year, exhibiting negative growth. The gross profit margin remains intact at 100% due to matching revenue and cost structures, but the net profit margin is negative, indicating profitability challenges. EBIT and EBITDA margins show stability, although they are moderate. Overall, the income statement reflects mixed results, with a strong gross margin but concerning net losses.

Balance Sheet

Telefonica's debt-to-equity ratio is moderate, reflecting a balanced leverage structure. However, the company's return on equity is negative due to net losses, posing profitability concerns. The equity ratio indicates a substantial proportion of assets financed by equity, suggesting some stability. Overall, the balance sheet shows stability in leverage but highlights profitability issues.

Cash Flow

The company's free cash flow has shown positive growth, reflecting efficient capital management. The operating cash flow to net income ratio is strong, indicating robust cash generation relative to net income. However, the free cash flow to net income ratio is less favorable due to negative net income. Overall, cash flow metrics demonstrate strong cash generation but are impacted by profitability challenges.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	38.93B	41.31B	40.65B	39.99B	39.28B	43.08B
Gross Profit	38.93B	28.76B	20.23B	27.05B	27.02B	30.06B
EBITDA	12.60B	12.35B	10.34B	13.54B	22.53B	13.82B
Net Income	-2.38B	-49.00M	-892.00M	2.01B	8.14B	1.58B
Balance Sheet
Total Assets	94.37B	100.50B	104.32B	109.64B	109.21B	105.05B
Cash, Cash Equivalents and Short-Term Investments	8.19B	9.26B	7.67B	9.69B	12.41B	8.10B
Total Debt	7.55B	45.02B	44.12B	8.68B	8.07B	5.29B
Total Liabilities	73.39B	77.75B	77.23B	77.93B	80.53B	86.79B
Stockholders Equity	17.28B	19.35B	21.85B	25.09B	22.21B	11.23B
Cash Flow
Free Cash Flow	5.35B	5.20B	5.49B	5.30B	4.10B	6.18B
Operating Cash Flow	10.84B	10.99B	11.65B	10.81B	10.27B	13.20B
Investing Cash Flow	-4.83B	-5.22B	-4.29B	-5.33B	5.90B	-7.79B
Financing Cash Flow	-4.49B	-4.67B	-7.19B	-7.92B	-12.99B	-5.44B

Telefonica Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5.36
• 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 TEF, the sentiment is Positive. The current price of 5.36 is below the 20-day moving average (MA) of 5.45, above the 50-day MA of 5.34, and above the 200-day MA of 4.69, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 48.76 is Neutral, neither overbought nor oversold. The STOCH value of 44.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TEF.

Telefonica Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TLK	74 Outperform	$19.04B	13.54	17.71%	6.70%	-5.13%	-5.90%
VIV	72 Outperform	$20.19B	19.89	8.20%	4.31%	-6.51%	-0.21%
AMX	68 Neutral	$59.85B	20.72	14.41%	2.65%	-0.64%	56.92%
CHTR	68 Neutral	$39.86B	7.18	36.19%	―	1.03%	17.05%
Sector *	60 Neutral	$46.60B	4.08	-11.40%	4.13%	1.85%	-42.71%
VOD	60 Neutral	$28.58B	9.21	-7.17%	4.19%	0.89%	-494.16%
TEF	60 Neutral	$30.27B	―	-3.55%	6.65%	-4.73%	-251.31%