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TELEFONICA SA (1TEF.MI) Stock Fundamental Analysis

BIT:1TEF - Euronext Milan - ES0178430E18 - Common Stock - Currency: EUR

4.66  +0.69 (+17.32%)

Fundamental Rating

3

We assign a fundamental rating of 3 out of 10 to 1TEF. 1TEF was compared to 30 industry peers in the Diversified Telecommunication Services industry. Both the profitability and financial health of 1TEF have multiple concerns. 1TEF is valued correctly, but it does not seem to be growing.


Dividend Valuation Growth Profitability Health

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2

1. Profitability

1.1 Basic Checks

1TEF had positive earnings in the past year.
In the past year 1TEF had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: 1TEF reported negative net income in multiple years.
Each year in the past 5 years 1TEF had a positive operating cash flow.
1TEF.MI Yearly Net Income VS EBIT VS OCF VS FCF1TEF.MI Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 5B 10B 15B

1.2 Ratios

Looking at the Return On Assets, with a value of -0.32%, 1TEF is doing worse than 70.00% of the companies in the same industry.
With a Return On Equity value of -1.64%, 1TEF is not doing good in the industry: 73.33% of the companies in the same industry are doing better.
The Return On Invested Capital of 1TEF (2.41%) is worse than 80.00% of its industry peers.
The Average Return On Invested Capital over the past 3 years for 1TEF is below the industry average of 7.40%.
Industry RankSector Rank
ROA -0.32%
ROE -1.64%
ROIC 2.41%
ROA(3y)0.08%
ROA(5y)1.74%
ROE(3y)0.1%
ROE(5y)9.53%
ROIC(3y)3.26%
ROIC(5y)3.34%
1TEF.MI Yearly ROA, ROE, ROIC1TEF.MI Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 10 20 30

1.3 Margins

1TEF has a worse Operating Margin (5.82%) than 70.00% of its industry peers.
1TEF's Operating Margin has improved in the last couple of years.
1TEF has a Gross Margin of 49.39%. This is in the lower half of the industry: 1TEF underperforms 63.33% of its industry peers.
1TEF's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 5.82%
PM (TTM) N/A
GM 49.39%
OM growth 3Y18.75%
OM growth 5Y8.06%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y0.37%
GM growth 5Y-1.04%
1TEF.MI Yearly Profit, Operating, Gross Margins1TEF.MI Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 10 20 30 40 50

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2

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), 1TEF is destroying value.
Compared to 1 year ago, 1TEF has about the same amount of shares outstanding.
Compared to 5 years ago, 1TEF has less shares outstanding
1TEF has a worse debt/assets ratio than last year.
1TEF.MI Yearly Shares Outstanding1TEF.MI Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2B 4B 6B
1TEF.MI Yearly Total Debt VS Total Assets1TEF.MI Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20B 40B 60B 80B 100B

2.2 Solvency

Based on the Altman-Z score of 0.98, we must say that 1TEF is in the distress zone and has some risk of bankruptcy.
1TEF has a worse Altman-Z score (0.98) than 73.33% of its industry peers.
1TEF has a debt to FCF ratio of 9.58. This is a negative value and a sign of low solvency as 1TEF would need 9.58 years to pay back of all of its debts.
1TEF has a Debt to FCF ratio (9.58) which is comparable to the rest of the industry.
A Debt/Equity ratio of 2.03 is on the high side and indicates that 1TEF has dependencies on debt financing.
Looking at the Debt to Equity ratio, with a value of 2.03, 1TEF is doing worse than 80.00% of the companies in the same industry.
Industry RankSector Rank
Debt/Equity 2.03
Debt/FCF 9.58
Altman-Z 0.98
ROIC/WACC0.6
WACC4.02%
1TEF.MI Yearly LT Debt VS Equity VS FCF1TEF.MI Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10B 20B 30B 40B

2.3 Liquidity

A Current Ratio of 0.87 indicates that 1TEF may have some problems paying its short term obligations.
1TEF has a Current ratio of 0.87. This is in the better half of the industry: 1TEF outperforms 63.33% of its industry peers.
1TEF has a Quick Ratio of 0.87. This is a bad value and indicates that 1TEF is not financially healthy enough and could expect problems in meeting its short term obligations.
1TEF has a Quick ratio (0.83) which is in line with its industry peers.
Industry RankSector Rank
Current Ratio 0.87
Quick Ratio 0.83
1TEF.MI Yearly Current Assets VS Current Liabilites1TEF.MI Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 10B 20B 30B

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2

3. Growth

3.1 Past

1TEF shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 11.11%, which is quite good.
The Revenue has been growing slightly by 1.63% in the past year.
Measured over the past years, 1TEF shows a decrease in Revenue. The Revenue has been decreasing by -3.12% on average per year.
EPS 1Y (TTM)11.11%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%-50%
Revenue 1Y (TTM)1.63%
Revenue growth 3Y1.7%
Revenue growth 5Y-3.12%
Sales Q2Q%5.4%

3.2 Future

Based on estimates for the next years, 1TEF will show a decrease in Earnings Per Share. The EPS will decrease by -1.92% on average per year.
1TEF is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -0.24% yearly.
EPS Next Y-23.76%
EPS Next 2Y-11.43%
EPS Next 3Y-4.55%
EPS Next 5Y-1.92%
Revenue Next Year-0.4%
Revenue Next 2Y0.25%
Revenue Next 3Y0.55%
Revenue Next 5Y-0.24%

3.3 Evolution

The Revenue growth rate is accelerating: in the next years the growth will be better than in the last years.
1TEF.MI Yearly Revenue VS Estimates1TEF.MI Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 10B 20B 30B 40B 50B
1TEF.MI Yearly EPS VS Estimates1TEF.MI Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 0.2 0.4 0.6

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5

4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 11.65 indicates a reasonable valuation of 1TEF.
1TEF's Price/Earnings ratio is a bit cheaper when compared to the industry. 1TEF is cheaper than 80.00% of the companies in the same industry.
When comparing the Price/Earnings ratio of 1TEF to the average of the S&P500 Index (26.87), we can say 1TEF is valued rather cheaply.
With a Price/Forward Earnings ratio of 15.28, 1TEF is valued correctly.
1TEF's Price/Forward Earnings ratio is in line with the industry average.
1TEF is valuated cheaply when we compare the Price/Forward Earnings ratio to 35.34, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 11.65
Fwd PE 15.28
1TEF.MI Price Earnings VS Forward Price Earnings1TEF.MI Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 10 20 30

4.2 Price Multiples

Compared to the rest of the industry, the Price/Free Cash Flow ratio of 1TEF indicates a rather cheap valuation: 1TEF is cheaper than 90.00% of the companies listed in the same industry.
Industry RankSector Rank
P/FCF 5.35
EV/EBITDA N/A
1TEF.MI Per share data1TEF.MI EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 2 4 6

4.3 Compensation for Growth

1TEF's earnings are expected to decrease with -4.55% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-11.43%
EPS Next 3Y-4.55%

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4

5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 5.61%, 1TEF is a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 4.34, 1TEF pays a bit more dividend than its industry peers.
1TEF's Dividend Yield is rather good when compared to the S&P500 average which is at 2.39.
Industry RankSector Rank
Dividend Yield 5.61%

5.2 History

The dividend of 1TEF decreases each year by -5.71%.
Dividend Growth(5Y)-5.71%
Div Incr YearsN/A
Div Non Decr YearsN/A

5.3 Sustainability

1TEF has negative earnings and hence a negative payout ratio. The dividend may be in danger.
1TEF's earnings and Dividend Rate are declining. This means the current dividend is most likely not sustainable.
DP-593.4%
EPS Next 2Y-11.43%
EPS Next 3Y-4.55%
1TEF.MI Yearly Income VS Free CF VS Dividend1TEF.MI Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 0 2B 4B 6B

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TELEFONICA SA

BIT:1TEF (8/6/2025, 7:00:00 PM)

4.66

+0.69 (+17.32%)

Chartmill FA Rating
GICS SectorCommunication Services
GICS IndustryGroupTelecommunication Services
GICS IndustryDiversified Telecommunication Services
Earnings (Last)02-27 2025-02-27/bmo
Earnings (Next)05-14 2025-05-14
Inst Owners28.66%
Inst Owner ChangeN/A
Ins Owners0.4%
Ins Owner ChangeN/A
Market Cap26.30B
Analysts54.84
Price Target4.28 (-8.15%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield 5.61%
Yearly Dividend0.33
Dividend Growth(5Y)-5.71%
DP-593.4%
Div Incr YearsN/A
Div Non Decr YearsN/A
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)-16.24%
Min EPS beat(2)-51.51%
Max EPS beat(2)19.03%
EPS beat(4)3
Avg EPS beat(4)6.28%
Min EPS beat(4)-51.51%
Max EPS beat(4)36.57%
EPS beat(8)6
Avg EPS beat(8)3.94%
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)1
Avg Revenue beat(2)-0.43%
Min Revenue beat(2)-1.43%
Max Revenue beat(2)0.57%
Revenue beat(4)3
Avg Revenue beat(4)2.6%
Min Revenue beat(4)-1.43%
Max Revenue beat(4)10.07%
Revenue beat(8)4
Avg Revenue beat(8)1.31%
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)-0.38%
PT rev (3m)1.58%
EPS NQ rev (1m)N/A
EPS NQ rev (3m)N/A
EPS NY rev (1m)-0.26%
EPS NY rev (3m)-6.32%
Revenue NQ rev (1m)N/A
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.64%
Valuation
Industry RankSector Rank
PE 11.65
Fwd PE 15.28
P/S 0.64
P/FCF 5.35
P/OCF 2.52
P/B 1.36
P/tB N/A
EV/EBITDA N/A
EPS(TTM)0.4
EY8.58%
EPS(NY)0.3
Fwd EY6.54%
FCF(TTM)0.87
FCFY18.69%
OCF(TTM)1.85
OCFY39.69%
SpS7.32
BVpS3.43
TBVpS-1.24
PEG (NY)N/A
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA -0.32%
ROE -1.64%
ROCE 3.22%
ROIC 2.41%
ROICexc 2.72%
ROICexgc 4.52%
OM 5.82%
PM (TTM) N/A
GM 49.39%
FCFM 11.9%
ROA(3y)0.08%
ROA(5y)1.74%
ROE(3y)0.1%
ROE(5y)9.53%
ROIC(3y)3.26%
ROIC(5y)3.34%
ROICexc(3y)3.65%
ROICexc(5y)3.75%
ROICexgc(3y)6.07%
ROICexgc(5y)6.25%
ROCE(3y)4.35%
ROCE(5y)4.46%
ROICexcg growth 3Y26.02%
ROICexcg growth 5Y3.81%
ROICexc growth 3Y25.08%
ROICexc growth 5Y8.63%
OM growth 3Y18.75%
OM growth 5Y8.06%
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y0.37%
GM growth 5Y-1.04%
F-Score6
Asset Turnover0.41
Health
Industry RankSector Rank
Debt/Equity 2.03
Debt/FCF 9.58
Debt/EBITDA N/A
Cap/Depr N/A
Cap/Sales 13.36%
Interest Coverage -2.27
Cash Conversion N/A
Profit Quality N/A
Current Ratio 0.87
Quick Ratio 0.83
Altman-Z 0.98
F-Score6
WACC4.02%
ROIC/WACC0.6
Cap/Depr(3y)N/A
Cap/Depr(5y)N/A
Cap/Sales(3y)13.84%
Cap/Sales(5y)14.7%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)11.11%
EPS 3YN/A
EPS 5YN/A
EPS Q2Q%-50%
EPS Next Y-23.76%
EPS Next 2Y-11.43%
EPS Next 3Y-4.55%
EPS Next 5Y-1.92%
Revenue 1Y (TTM)1.63%
Revenue growth 3Y1.7%
Revenue growth 5Y-3.12%
Sales Q2Q%5.4%
Revenue Next Year-0.4%
Revenue Next 2Y0.25%
Revenue Next 3Y0.55%
Revenue Next 5Y-0.24%
EBIT growth 1Y-42.5%
EBIT growth 3Y20.77%
EBIT growth 5Y4.69%
EBIT Next Year186.65%
EBIT Next 3Y42.49%
EBIT Next 5Y23.68%
FCF growth 1Y8.31%
FCF growth 3Y6.37%
FCF growth 5Y-7.72%
OCF growth 1Y0.45%
OCF growth 3Y0.61%
OCF growth 5Y-7%