Telefonica, S.A. TEF reported a third-quarter 2024 net income of €10 million, which plummeted 98.1% year over year. Furthermore, basic earnings per share (EPS) were €0.1 (12 cents) compared with €0.09 in the year-ago quarter. The bottom line surpassed the Zacks Consensus Estimate by 50%.

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Quarterly revenues fell 2.9% year over year to €10,023 million ($11,061 million). However, the top line beat the Zacks Consensus Estimate by 0.1%. Currency volatility notably impacted TEF’s revenues, with a €429 million reduction due to foreign exchange rate movements.

Results by Business Units

Telefonica Espana: Quarterly revenues in Spain increased 1% year over year on a reported basis to €3,182 million, driven by momentum in mobile handset sales and retail sales. The quarterly adjusted EBITDA grew 1% to €1,155 million due to an increase in customer satisfaction. The company achieved the highest customer additions in six years and a Net Promoter Score of 34 points. With churn rates at a historic low of 0.8%, the segment is poised for continued growth, as customer satisfaction and loyalty contribute to sustainable revenues.

Telefonica Deutschland: Quarterly revenues declined 1.6% to €2,131 million, driven by sluggish trends across the mobile business amid growth in the fixed business. The quarterly adjusted EBITDA margin was 33.1%. Capital expenditure (CapEx) rose 6.3% to €332 million in the quarter.

VirginMedia-O2 U.K.: Quarterly revenues fell 0.7% to €3,197 million. The quarterly adjusted EBITDA margin was 36.6%. CapEx inched up 0.6% to €665 million in the quarter.

Telefonica SA Price, Consensus and EPS Surprise

Telefonica SA price-consensus-eps-surprise-chart | Telefonica SA Quote

Telefonica Brasil: Quarterly revenues in Brazil decreased 6.4% to €2,308 million, impacted by currency depreciation. A slowdown in the mobile and fixed businesses led to the contraction. The quarterly adjusted EBITDA declined 5.9% to €1,030 million. The company’s operations in Brazil were affected by the depreciation of the Brazilian real, which also led to a €159 million reduction in EBITDA. CapEx decreased 15.9% to €414 million in the quarter.

Telefonica Infra (Telxius): The unit, responsible for next-generation infrastructure deployment, ended the period with 24 million premises connected with fibre. Telxius, Telefonica’s submarine cable company, experienced a 12% increase in traffic over the first nine months with a high profitability ratio of 48.9%.

Telefonica Tech: The segment reported revenue growth of 9.5% year over year in the first nine months to €1,453 million, supported by a 40% increase in orders. Quarterly revenues increased 6.3% year over year to €470 million. The healthy growth in bookings was enhanced by significant private-sector contracts in finance, healthcare and manufacturing. This growth adds high-value, recurring contracts to the backlog, supporting long-term revenue sustainability.

Telefonica Hispam: Quarterly revenues in the Telefonica Hispam segment decreased 6.2% to €2,100 million. The quarterly adjusted EBITDA margin was 17.9%. CapEx fell 11.1% to €169 million in the quarter.

Other Details

Quarterly adjusted EBITDA was €2,946 million, down 11.5% year over year. Operating income was €740 million in the quarter under review, which decreased 30.1%.

Cash Flow & Liquidity

For the nine months ended Sept. 30, 2024, Telefonica generated €7,120 million of net cash from operating activities compared with €8,238 million generated in the comparable period in the prior year. The free cash flow for the same period totaled €1,030 million.

As of Sept. 30, 2024, the company had €6,325 million in cash and cash equivalents, with €32,180 million of non-current financial liabilities.

2024 Outlook Reconfirmed

The company expects revenues to grow approximately 1%. EBITDA is expected to rise 1% to 2%. CapEx-to-sales ratio is likely to be up to 13% and a growth in free cash flow of above 10%.

In addition, the company reiterated the cash dividend of €0.30 per share, payable on December 2024 (€0.15 per share) and June 2025 (€0.15 per share).

TEF’s Zacks Rank

Telefonica currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Itron Inc ITRI reported non-GAAP EPS of $1.84 for third-quarter 2024, which beat the Zacks Consensus Estimate by 62.8%. The company reported earnings of 98 cents in the prior-year quarter.

Shares of ITRI surged 77% in the past year. 

Watts Water Technologies, Inc. WTS reported third-quarter 2024 adjusted EPS of $2.03 compared with $2.04 in the prior-year quarter. The bottom line topped the Zacks Consensus Estimate by 2%.

Shares of WTS have gained 5.2% in the past year. 

Western Digital Corporation WDC reported first-quarter fiscal 2025 non-GAAP earnings of $1.78 per share, surpassing the Zacks Consensus Estimate by 2.3%. The company incurred a loss of $1.76 per share in the prior-year quarter.

Shares of WDC have gained 51.1% in the past year. 

Note: €1 = $1.09893 (period average from July 1, 2024, to Sept. 30, 2024)
         €1 = $1.11602 (as of Sept. 30, 2024)

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