Taking everything into account, TEF scores 4 out of 10 in our fundamental rating. TEF was compared to 36 industry peers in the Diversified Telecommunication Services industry. While TEF is still in line with the averages on profitability rating, there are concerns on its financial health. TEF is valued correctly, but it does not seem to be growing.

Quickly go to:

1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

TEF had positive earnings in the past year.
In the past year TEF had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: TEF reported negative net income in multiple years.
In the past 5 years TEF always reported a positive cash flow from operatings.

1.2 Ratios

TEF has a Return On Assets of -4.10%. This is in the lower half of the industry: TEF underperforms 63.16% of its industry peers.
TEF has a worse Return On Equity (-21.56%) than 71.05% of its industry peers.
The Return On Invested Capital of TEF (7.73%) is better than 84.21% of its industry peers.
The Average Return On Invested Capital over the past 3 years for TEF is below the industry average of 6.76%.
The 3 year average ROIC (3.43%) for TEF is below the current ROIC(7.73%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	-4.1%
ROE	-21.56%
ROIC	7.73%

ROA(3y)0.08%

ROA(5y)1.74%

ROE(3y)0.1%

ROE(5y)9.53%

ROIC(3y)3.43%

ROIC(5y)3.52%

1.3 Margins

TEF has a Operating Margin (12.00%) which is comparable to the rest of the industry.
TEF's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 35.73%, TEF is doing worse than 78.95% of the companies in the same industry.
TEF's Gross Margin has been stable in the last couple of years.

		Industry Rank	Sector Rank
OM	12%
PM (TTM)	N/A
GM	35.73%

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%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so TEF is still creating some value.
TEF has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for TEF has been reduced compared to 5 years ago.
Compared to 1 year ago, TEF has a worse debt to assets ratio.

2.2 Solvency

TEF has a debt to FCF ratio of 8.80. This is a slightly negative value and a sign of low solvency as TEF would need 8.80 years to pay back of all of its debts.
TEF's Debt to FCF ratio of 8.80 is fine compared to the rest of the industry. TEF outperforms 68.42% of its industry peers.
A Debt/Equity ratio of 2.07 is on the high side and indicates that TEF has dependencies on debt financing.
With a Debt to Equity ratio value of 2.07, TEF is not doing good in the industry: 71.05% of the companies in the same industry are doing better.

		Industry Rank	Sector Rank
Debt/Equity	2.07
Debt/FCF	8.8
Altman-Z	N/A

ROIC/WACC1.79

WACC4.31%

2.3 Liquidity

A Current Ratio of 0.84 indicates that TEF may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.84, TEF is doing worse than 73.68% of the companies in the same industry.
TEF has a Quick Ratio of 0.84. This is a bad value and indicates that TEF is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.80, TEF is doing worse than 76.32% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	0.84
Quick Ratio	0.8

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The earnings per share for TEF have decreased strongly by -34.78% in the last year.
The Earnings Per Share has been decreasing by -8.73% on average over the past years.
TEF shows a strong growth in Revenue. In the last year, the Revenue has grown by 40.77%.
Measured over the past years, TEF shows a decrease in Revenue. The Revenue has been decreasing by -3.12% on average per year.

EPS 1Y (TTM)-34.78%

EPS 3YN/A

EPS 5Y-8.73%

EPS Q2Q%-18.18%

Revenue 1Y (TTM)40.77%

Revenue growth 3Y1.7%

Revenue growth 5Y-3.12%

Sales Q2Q%-10.63%

3.2 Future

The Earnings Per Share is expected to grow by 1.32% on average over the next years.
The Revenue is expected to decrease by -1.34% on average over the next years.

EPS Next Y-37.45%

EPS Next 2Y-9.99%

EPS Next 3Y-2.86%

EPS Next 5Y1.32%

Revenue Next Year-11.05%

Revenue Next 2Y-5.32%

Revenue Next 3Y-3.08%

Revenue Next 5Y-1.34%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 10.89, the valuation of TEF can be described as reasonable.
Based on the Price/Earnings ratio, TEF is valued cheaper than 84.21% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.32. TEF is valued rather cheaply when compared to this.
The Price/Forward Earnings ratio is 10.01, which indicates a very decent valuation of TEF.
Based on the Price/Forward Earnings ratio, TEF is valued cheaply inside the industry as 86.84% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 25.57, TEF is valued rather cheaply.

		Industry Rank	Sector Rank
PE	10.89
Fwd PE	10.01

4.2 Price Multiples

Based on the Price/Free Cash Flow ratio, TEF is valued cheaper than 97.37% of the companies in the same industry.

		Industry Rank	Sector Rank
P/FCF	3.75
EV/EBITDA	N/A

4.3 Compensation for Growth

A cheap valuation may be justified as TEF's earnings are expected to decrease with -2.86% in the coming years.

PEG (NY)N/A

PEG (5Y)N/A

EPS Next 2Y-9.99%

EPS Next 3Y-2.86%

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5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 7.35%, TEF is a good candidate for dividend investing.
The stock price of TEF dropped by -26.73% in the last 3 months. With lower prices the dividend yield is higher, but it may be a sign investors do not trust the long term dividend.
Compared to an average industry Dividend Yield of 2.25, TEF pays a better dividend. On top of this TEF pays more dividend than 92.11% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 1.83, TEF pays a better dividend.

		Industry Rank	Sector Rank
Dividend Yield	7.35%

5.2 History

The dividend of TEF decreases each year by -5.71%.
TEF has paid a dividend for at least 10 years, which is a reliable track record.

Dividend Growth(5Y)-5.71%

Div Incr Years0

Div Non Decr Years0

5.3 Sustainability

TEF has negative earnings and hence a negative payout ratio. The dividend may be in danger.

DP-48.26%

EPS Next 2Y-9.99%

EPS Next 3Y-2.86%

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TELEFONICA SA-SPON ADR / TEF FAQ

What is the ChartMill fundamental rating of TELEFONICA SA-SPON ADR (TEF) stock?

ChartMill assigns a fundamental rating of 4 / 10 to TEF.

Can you provide the valuation status for TELEFONICA SA-SPON ADR?

ChartMill assigns a valuation rating of 6 / 10 to TELEFONICA SA-SPON ADR (TEF). This can be considered as Fairly Valued.

How profitable is TELEFONICA SA-SPON ADR (TEF) stock?

TELEFONICA SA-SPON ADR (TEF) has a profitability rating of 4 / 10.

What is the valuation of TELEFONICA SA-SPON ADR based on its PE and PB ratios?

The Price/Earnings (PE) ratio for TELEFONICA SA-SPON ADR (TEF) is 10.89 and the Price/Book (PB) ratio is 1.04.

What is the earnings growth outlook for TELEFONICA SA-SPON ADR?

The Earnings per Share (EPS) of TELEFONICA SA-SPON ADR (TEF) is expected to decline by -37.45% in the next year.