Telefonica (TEF) AI Stock Analysis

• Market Cap: $29.10B
• Dividend Yield: 4.77%
• Average Volume (3M): 795.48K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.13
• Revenue Growth: 1.18%
• EPS Growth: N/A
• Country: US
• Employees: 100,870
• Sector: Communication Services
• Sector Strength: 82
• Industry: Telecommunications Services
• EPS (TTM): -0.20
• Shares Outstanding: 5,670,161,600
• 10 Day Avg. Volume: 607,296
• 30 Day Avg. Volume: 795,481
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• 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: $4.64
• Price Target Upside: -6.83% Downside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Telefonica's stock score is driven by a mixed financial performance with significant debt and negative net income but strong operational efficiencies and promising cash flow growth. Technical indicators support a positive momentum. The attractive dividend yield further supports the valuation, making it appealing for income investors despite profitability challenges. Positive guidance from the earnings call, focusing on growth and strategic initiatives, bolsters the overall outlook.

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 through multiple streams, primarily through its fixed and mobile telephony services. The company earns income from providing voice services, mobile data, and broadband internet access, which are offered to both individual consumers and businesses. Subscription fees, usage charges, and data packages constitute significant portions of Telefónica's earnings. Additionally, the company capitalizes on digital services and solutions, such as cloud computing, cybersecurity, and IoT (Internet of Things), which cater to the growing demand for digital transformation in various industries. Partnerships with content providers enhance their offerings in entertainment and media, further contributing to their revenue. Telefónica's strategic investments in network infrastructure and technology innovation also play a crucial role in maintaining its competitive edge 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

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

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

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.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
41.31B	40.65B	39.99B	39.28B	43.08B
	Gross Profit
28.76B	20.23B	27.05B	27.02B	30.06B
	EBIT
2.40B	2.59B	4.06B	13.59B	6.01B
	EBITDA
12.35B	10.34B	13.54B	22.53B	13.82B
	Net Income Common Stockholders
-49.00M	-892.00M	2.01B	8.14B	1.58B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
9.26B	7.67B	9.69B	12.41B	8.10B
	Total Assets
100.50B	104.32B	109.64B	109.21B	105.05B
	Total Debt
45.02B	44.12B	8.68B	8.07B	5.29B
	Net Debt
36.96B	36.96B	1.43B	-510.00M	-310.00M
	Total Liabilities
77.75B	77.23B	77.93B	80.53B	86.79B
	Stockholders Equity
19.35B	21.85B	25.09B	22.21B	11.23B
Cash Flow		Free Cash Flow
5.20B	5.49B	5.30B	4.10B	6.18B
	Operating Cash Flow
0.00	11.65B	10.81B	10.27B	13.20B
	Investing Cash Flow
-5.22B	-4.29B	-5.33B	5.90B	-7.79B
	Financing Cash Flow
-4.67B	-7.19B	-7.92B	-12.99B	-5.44B

Telefonica Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4.98
• 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 4.98 is above the 20-day moving average (MA) of 4.92, above the 50-day MA of 4.71, and above the 200-day MA of 4.44, indicating a bullish trend. The MACD of 0.12 indicates Positive momentum. The RSI at 54.65 is Neutral, neither overbought nor oversold. The STOCH value of 51.56 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
CHT	79 Outperform	$33.40B	29.56	9.58%	2.64%	-0.19%	-0.86%
VIV	77 Outperform	$16.04B	15.34	7.95%	3.93%	-0.47%	1.69%
TLK	76 Outperform	$15.69B	10.62	16.28%	5.38%	-5.14%	-7.47%
VOD	71 Outperform	$24.24B	9.36	4.31%	7.52%	-24.84%	-74.77%
AMX	71 Outperform	$52.64B	31.40	8.54%	3.00%	0.19%	-50.17%
TEF	64 Neutral	$29.10B	―	<0.01%	4.77%	1.18%	―
Sector *	60 Neutral	$13.50B	7.33	-2.74%	3.80%	2.09%	-39.49%