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Telefonica (TEF)
NYSE:TEF

Telefonica (TEF) AI Stock Analysis

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TE

Telefonica

(NYSE:TEF)

Rating:59Neutral
Price Target:
$5.50
▲(5.36%Upside)
Telefonica's overall score reflects a mix of strengths and challenges. While operational efficiency and positive technical indicators provide support, financial risks from high leverage and negative net income weigh heavily. Earnings call insights show strategic focus but also highlight revenue and forex challenges, affecting the overall outlook.

Telefonica (TEF) vs. SPDR S&P 500 ETF (SPY)

Telefonica Business Overview & Revenue Model

Company DescriptionTelefónica, 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 MoneyTelefónica generates revenue through multiple streams, primarily from its telecommunications services. The company earns money by providing fixed-line and mobile telephony services, broadband internet, and pay-TV subscriptions. Mobile services, including voice and data plans, constitute a significant portion of their revenue, especially in markets like Spain, Germany, and Latin America. Additionally, Telefónica monetizes its digital services, which include cloud computing, cybersecurity, and IoT solutions. The company also benefits from strategic partnerships and collaborations with technology firms to expand its service offerings and improve infrastructure. Furthermore, Telefónica engages in wholesale operations, selling network capacity to other telecommunications providers, which contributes to its overall earnings.

Telefonica Earnings Call Summary

Earnings Call Date:May 14, 2025
(Q1-2025)
|
% Change Since: 9.89%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook with strong performance in core markets and network expansion, alongside challenges like forex impacts and revenue declines in specific segments. The company remains focused on strategic execution and maintaining financial flexibility.
Q1-2025 Updates
Positive Updates
Strong Customer Engagement and Network Expansion
NPS scores reached new highs with Spain leading, and strong improvements in Brazil and Germany. Rolled out fiber to over 1.5 million premises and reached 75% 5G coverage in core markets.
Growth in Core Markets
Spain, Brazil, and Germany showed strong performance in key commercial and financial metrics, with Spain's domestic revenue growing by 1.7% year-on-year and Brazil's revenue rising 6% above inflation.
Reduction in Net Debt
Net debt decreased by €0.1 billion in the first three months of the year, with a further reduction to €25.8 billion expected after the sale of Peru and the signing of the binding agreement for Colombia.
Telefonica Tech and Infra Growth
Telefonica Tech's revenue increased by 6.6% year-on-year, with a 15% expansion in the commercial funnel. Telefonica Infra reached 29 million premises passed with fiber.
Negative Updates
Forex Impact on Financial Metrics
Reported results were negatively affected by forex, impacting revenue and EBITDA figures despite organic growth in main metrics.
Wholesale Revenue Decline in Spain
Wholesale revenues declined in Q1 as anticipated, affecting overall financial performance despite new long-term agreements signed in 2024.
Hispam EBITDA Decline
EBITDA minus CapEx in Hispam fell 31% due to lower EBITDA and higher lease costs related to the single network launch in Colombia.
Company Guidance
During the Q1 2025 results conference call, Telefonica provided guidance indicating that they are on track to meet their 2025 financial targets across various metrics, including revenue, EBITDA, and EBITDA minus CapEx, all expected to grow organically. The company highlighted robust performance in key markets such as Spain, Brazil, and Germany, with particular emphasis on their fiber and 5G network expansion. Fiber was rolled out to over 1.5 million premises, achieving 75% 5G coverage in core markets. Despite forex impacts, they reported a net debt decrease, with free cash flow expected to align with 2024 figures, emphasizing a commitment to maintaining financial flexibility and operational excellence. The company reiterated its dividend for 2025, underscoring a strategy focused on customer engagement, network transformation, and efficiency gains. Additionally, they announced a strategic review to be completed in the second half of the year, aimed at further enhancing their operational and financial performance.

Telefonica Financial Statement Overview

Summary
Telefonica shows operational strength with robust gross profit and EBITDA margins but faces profitability challenges with negative net income. High leverage poses a risk, suggesting a need for better capital management. Cash flow concerns highlight potential liquidity issues, necessitating strategic adjustments.
Income Statement
60
Neutral
Telefonica's revenue has been relatively stable, with a moderate growth rate of 1.63% from 2022 to 2023. The gross profit margin is strong at around 69.6% for 2023, but the net profit margin is negative due to a net loss. EBIT and EBITDA margins remain healthy, indicating operational efficiency, but the negative net income is a concern.
Balance Sheet
55
Neutral
Telefonica maintains a high debt-to-equity ratio, increasing from 2.02 in 2022 to 2.33 in 2023, which may pose financial risk. The equity ratio has decreased slightly to 18.54%. Return on equity is currently negative due to net losses, highlighting profitability challenges.
Cash Flow
50
Neutral
Free cash flow decreased slightly from 2022 to 2023, indicating some pressure on cash generation. The operating cash flow has decreased significantly, impacting cash flow to net income ratios negatively. This suggests potential liquidity challenges despite positive free cash flow.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue40.40B41.31B40.65B39.99B39.28B43.08B
Gross Profit38.22B28.76B20.23B27.05B27.02B30.06B
EBITDA13.48B12.35B10.34B13.54B22.53B13.82B
Net Income-1.89B-49.00M-892.00M2.01B8.14B1.58B
Balance Sheet
Total Assets99.01B100.50B104.32B109.64B109.21B105.05B
Cash, Cash Equivalents and Short-Term Investments10.15B9.26B7.67B9.69B12.41B8.10B
Total Debt7.79B45.02B44.12B8.68B8.07B5.29B
Total Liabilities75.35B77.75B77.23B77.93B80.53B86.79B
Stockholders Equity19.72B19.35B21.85B25.09B22.21B11.23B
Cash Flow
Free Cash Flow4.95B5.20B5.49B5.30B4.10B6.18B
Operating Cash Flow6.75B0.0011.65B10.81B10.27B13.20B
Investing Cash Flow-4.97B-5.22B-4.29B-5.33B5.90B-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 Price5.22
Price Trends
50DMA
5.07
Positive
100DMA
4.76
Positive
200DMA
4.49
Positive
Market Momentum
MACD
0.06
Positive
RSI
53.92
Neutral
STOCH
56.86
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 5.22 is above the 20-day moving average (MA) of 5.21, above the 50-day MA of 5.07, and above the 200-day MA of 4.49, indicating a bullish trend. The MACD of 0.06 indicates Positive momentum. The RSI at 53.92 is Neutral, neither overbought nor oversold. The STOCH value of 56.86 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TEF.

Telefonica Risk Analysis

Telefonica disclosed 16 risk factors in its most recent earnings report. Telefonica reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Telefonica Peers Comparison

Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TLTLK
79
Outperform
$16.46B11.2416.28%6.04%-5.14%-7.47%
VIVIV
77
Outperform
$19.01B18.897.95%1.93%-5.69%-0.05%
CHCHT
76
Outperform
$34.68B29.929.59%2.91%-0.19%-0.79%
AMAMX
71
Outperform
$55.27B33.038.54%2.71%0.19%-49.68%
TETEF
59
Neutral
$30.09B-0.55%4.56%-2.29%-182.68%
58
Neutral
C$3.35B8.01-17.94%5.78%-2.71%-16.54%
VOVOD
57
Neutral
$26.93B9.21-7.17%4.63%0.89%-494.16%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TEF
Telefonica
5.22
1.18
29.21%
AMX
America Movil
17.80
0.33
1.89%
CHT
Chunghwa Telecom Co
44.33
9.21
26.22%
TLK
PT Telekomunikasi Indonesia Tbk
16.39
-1.52
-8.49%
VIV
Telefonica Brasil
11.53
3.46
42.87%
VOD
Vodafone
10.87
2.19
25.23%
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.Date of analysis: Jun 24, 2025