DB:TNE2

Stock Analysis Report

Executive Summary

Telefónica, S.A. provides mobile and fixed communication services in Europe and Latin America.


Snowflake Analysis

Fair value with moderate growth potential.


Similar Companies

Share Price & News

How has Telefónica's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: TNE2's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-3.3%

TNE2

4.0%

DE Telecom

9.9%

DE Market


1 Year Return

-44.5%

TNE2

-19.7%

DE Telecom

-17.5%

DE Market

Return vs Industry: TNE2 underperformed the German Telecom industry which returned -21.3% over the past year.

Return vs Market: TNE2 underperformed the German Market which returned -17.7% over the past year.


Shareholder returns

TNE2IndustryMarket
7 Day-3.3%4.0%9.9%
30 Day-25.8%-16.8%-16.6%
90 Day-35.7%-17.0%-24.8%
1 Year-42.0%-44.5%-15.4%-19.7%-15.0%-17.5%
3 Year-55.4%-60.6%-18.4%-31.4%-17.4%-24.5%
5 Year-59.5%-68.8%-17.5%-35.0%-16.6%-28.1%

Price Volatility Vs. Market

How volatile is Telefónica's share price compared to the market and industry in the last 5 years?


Simply Wall St News

No news available

Valuation

Is Telefónica undervalued compared to its fair value and its price relative to the market?

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: TNE2 (€4.08) is trading below our estimate of fair value (€11.42)

Significantly Below Fair Value: TNE2 is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: TNE2 is poor value based on its PE Ratio (24.6x) compared to the Telecom industry average (17.1x).

PE vs Market: TNE2 is poor value based on its PE Ratio (24.6x) compared to the German market (16.4x).


Price to Earnings Growth Ratio

PEG Ratio: TNE2 is good value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: TNE2 is overvalued based on its PB Ratio (1.2x) compared to the DE Telecom industry average (1.1x).


Next Steps

Future Growth

How is Telefónica forecast to perform in the next 1 to 3 years based on estimates from 23 analysts?

25.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TNE2's forecast earnings growth (25.1% per year) is above the savings rate (-0.4%).

Earnings vs Market: TNE2's earnings (25.1% per year) are forecast to grow faster than the German market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: TNE2's revenue is expected to decline over the next 3 years (-1.7% per year).

High Growth Revenue: TNE2's revenue is forecast to decline over the next 3 years (-1.7% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TNE2's Return on Equity is forecast to be low in 3 years time (16.7%).


Next Steps

Past Performance

How has Telefónica performed over the past 5 years?

7.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TNE2 has high quality earnings.

Growing Profit Margin: TNE2's current net profit margins (1.7%) are lower than last year (5.9%).


Past Earnings Growth Analysis

Earnings Trend: TNE2's earnings have grown by 7.3% per year over the past 5 years.

Accelerating Growth: TNE2's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: TNE2 had negative earnings growth (-70.6%) over the past year, making it difficult to compare to the Telecom industry average (10.4%).


Return on Equity

High ROE: TNE2's Return on Equity (6.5%) is considered low.


Next Steps

Financial Health

How is Telefónica's financial position?


Financial Position Analysis

Short Term Liabilities: TNE2's short term assets (€24.3B) do not cover its short term liabilities (€30.2B).

Long Term Liabilities: TNE2's short term assets (€24.3B) do not cover its long term liabilities (€63.2B).


Debt to Equity History and Analysis

Debt Level: TNE2's debt to equity ratio (205.8%) is considered high.

Reducing Debt: TNE2's debt to equity ratio has increased from 197% to 205.8% over the past 5 years.

Debt Coverage: TNE2's debt is well covered by operating cash flow (28.7%).

Interest Coverage: TNE2's interest payments on its debt are well covered by EBIT (3.4x coverage).


Balance Sheet

Inventory Level: TNE2 has a high level of physical assets or inventory.

Debt Coverage by Assets: TNE2's debt is not covered by short term assets (assets are 0.5x debt).


Next Steps

Dividend

What is Telefónica's current dividend yield, its reliability and sustainability?

9.67%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: TNE2's dividend (9.67%) is higher than the bottom 25% of dividend payers in the German market (1.7%).

High Dividend: TNE2's dividend (9.67%) is in the top 25% of dividend payers in the German market (4.97%)


Stability and Growth of Payments

Stable Dividend: TNE2's dividend payments have been volatile in the past 10 years.

Growing Dividend: TNE2's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (238.1%), TNE2's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: TNE2's dividends in 3 years are forecast to be covered by earnings (58.5% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.7yrs

Average management tenure


CEO

José María Álvarez-Pallete López (56yo)

3.92s

Tenure

€5,376,670

Compensation

Mr. José María Álvarez-Pallete López has been the Chief Executive Officer of Telefónica Latinoamérica, a subsidiary of Telefonica S.A. since 2002. Mr. López has been Chief Executive Officer at Telefónica,  ...


CEO Compensation Analysis

Compensation vs Market: José María's total compensation ($USD5.93M) is about average for companies of similar size in the German market ($USD4.93M).

Compensation vs Earnings: José María's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
José María Álvarez-Pallete López
Executive Chairman & CEO3.92yrs€5.38m0.028% 6.0m
Ángel Vilá Boix
COO & Executive Director2.67yrs€4.01m0.0074% 1.6m
Laura Abasolo de Baquedano
Chief Financial & Control Officer2.67yrsno datano data
Enrique Blanco
Chief Technology & Information Officer9.17yrsno datano data
Pablo Eguiron Vidarte
Head of Investor Relations10.67yrsno datano data
Pablo De Carvajal González
General Counsel2.17yrsno datano data
Marta Machicot
Chief People Officer2.17yrsno datano data
María García-Legaz Ponce
Chief of Staffno datano datano data
Juan Francisco Gallego Arrechea
General Manager of Internal Audit3.83yrsno datano data
Eduardo Navarro de Carvalho
Chief Strategy & Corporate Affairs Officer0.17yrno datano data

2.7yrs

Average Tenure

55.5yo

Average Age

Experienced Management: TNE2's management team is considered experienced (2.7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
José María Álvarez-Pallete López
Executive Chairman & CEO3.92yrs€5.38m0.028% 6.0m
Ángel Vilá Boix
COO & Executive Director2.67yrs€4.01m0.0074% 1.6m
Markus Haas
CEO & Chairman of Telefónica Deutschland Holding AG3.17yrsno datano data
Christian Mauad Gebara
Chairman & CEO of Telefónica Brasilno datano datano data
José Javier Echenique Landiríbar
Vice-Chairman & Lead Independent Director0.25yr€258.60k0.0034% 713.2k
Peter Erskine
External Director14.17yrs€250.60k0.00084% 177.8k
Isidro Fainé Casas
Vice Chairman26.17yrs€280.00k0.012% 2.5m
Peter Löscher
Independent Director3.92yrs€167.60k0.0028% 601.1k
José María Abril Pérez
Vice Chairman12.67yrs€300.20k0.0048% 1.0m
Antonio Carlos Valente da Silva
Chairman of Telefônica Brasil S Ano datano datano data

8.3yrs

Average Tenure

64yo

Average Age

Experienced Board: TNE2's board of directors are considered experienced (8.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Telefónica, S.A.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Telefónica, S.A.
  • Ticker: TNE2
  • Exchange: DB
  • Founded: 1924
  • Industry: Integrated Telecommunication Services
  • Sector: Telecom
  • Market Cap: €21.164b
  • Shares outstanding: 5.11b
  • Website: https://www.telefonica.com

Number of Employees


Location

  • Telefónica, S.A.
  • Distrito Telefónica
  • Ronda de la Comunicación, s/n
  • Madrid
  • Madrid
  • 28050
  • Spain

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
0TDELSE (London Stock Exchange)YesOrdinary SharesGBEURJan 1980
TEFBASE (Buenos Aires Stock Exchange)YesOrdinary SharesARARSJan 1980
TEFBME (Bolsas y Mercados Espanoles)YesOrdinary SharesESEURJan 1980
TNE5DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1980
TEFBIT (Borsa Italiana)YesOrdinary SharesITEURJan 1980
TNE5XTRA (XETRA Trading Platform)YesOrdinary SharesDEEURJan 1980
TEFO.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1980
TEFEBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBEURJan 1980
TEFWBAG (Wiener Boerse AG)YesOrdinary SharesATEURJan 1980
TFAENXTBR (Euronext Brussels)YesOrdinary SharesBEEURJan 1980
TEFNYSE (New York Stock Exchange)ADR EA REPR 1 ORD NPVUSUSDJun 1987
TEF NBMV (Bolsa Mexicana de Valores)ADR EA REPR 1 ORD NPVMXMXNJun 1987
TEFBVL (Bolsa de Valores de Lima)ADR EA REPR 1 ORD NPVPEUSDJun 1987
TNE2DB (Deutsche Boerse AG)ADR EA REPR 1 ORD NPVDEEURJun 1987
TNE2XTRA (XETRA Trading Platform)ADR EA REPR 1 ORD NPVDEEURJun 1987
0A2YLSE (London Stock Exchange)ADR EA REPR 1 ORD NPVGBUSDJun 1987

Biography

Telefónica, S.A. provides mobile and fixed communication services in Europe and Latin America. The company’s mobile and related services and products comprise mobile voice, value added, mobile data, Internet, wholesale, corporate, roaming, fixed wireless, 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 and business oriented value-added; video telephony; intelligent network; and telephony information services. The company also leases and sells handset equipment; and provides Internet and broadband multimedia services comprising Internet service provider, portal and network, retail and wholesale broadband access, narrowband switched access to Internet, high-speed Internet through fibre to the home, and voice over Internet protocol services. In addition, it offers leased lines; virtual private network; fibre optics; 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; international wholesale; leased lines for other operators’ network deployment; and local loop leasing under the unbundled local loop regulation framework, as well as bit stream services, wholesale line rental accesses, and leased ducts for other operators’ fiber deployment. Additionally, it provides Internet protocol television (TV), over-the-top network TV, cable and satellite TV, and pay TV services; M2M connectivity platforms; financial and other payment, security, cloud computing, advertising, big data, and digital telco experience services; and Aura and Movistar Home. Telefónica, S.A. has a collaboration agreement with Juniper Networks, Inc. The company was founded in 1924 and is headquartered in Madrid, Spain. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/03/30 21:13
End of Day Share Price2020/03/30 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.