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Telefonica (TEF) Surges 10.1% YTD: Will the Uptrend Continue?
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Telefonica (TEF - Free Report) witnessed strong momentum this year, with shares gaining 10.1% year to date compared with the sub-industry’s rise of 2%.
Telefonica provides mobile and fixed communication services in Europe and Latin America. The company continues to invest heavily in deploying and transforming its network to provide excellent connectivity in all dimensions, capacity, speed, coverage and security.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The increase in share price is driven by the company’s robust financial performance. The company came up with an impressive performance in second-quarter 2023.
The company reported a second-quarter 2023 net income of €462 million compared with €320 million in the year-ago quarter. Further, basic earnings per share (EPS) were €0.07 compared with €0.05 in the prior-year quarter. Quarterly total revenues increased 0.9% year over year to €10,133 million. Organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 3.3% year over year to €11,667 million.
The company’s performance benefits from solid momentum across Telefonica Tech and Telefonica Brazil business segments. In the second quarter, revenues in Telefonica Brazil grew 4.7% to €2,362 million, mainly due to the momentum in mobile revenues and the progressive update on tariffs.
The company’s 5G network provides almost 86% of the population in Spain with advanced mobile Internet services, streamlining the entire communications infrastructure of the country. In the second quarter, the company announced the launch of a new OTT proposal, Movistar Plus+, which is available to the entire TV market. In Spain, Bluevia plans to increase its fiber coverage to 5 million by 2024.
Also, the company has reportedly entered into a deal to digitally transform Bodegas Borsao, a Spanish company with more than 2,100 hectares of vineyards and 375 winegrowers, to make the latter’s operational and logistical processes more efficient.
The company pursues strategic collaboration to expand its footprint. In July, Telefonica announced that it is collaborating with Celo Foundation to decentralize the Celo platform, which will help improve the Celo blockchain’s security.
Also, the company has an impressive VGM Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Despite solid demand, the company is prone to several risks. The company operates in various places throughout the world, which makes it exposed to unfavorable forex dynamics.
The Zacks Consensus Estimate for Watts Water’s 2023 EPS has increased 5.8% in the past 60 days to $7.61. The company’s long-term earnings growth rate is 8%.
Watts Water’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 12.5%. Shares of WTS have rallied 28.3% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have surged 63.7% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 12.6% in the past 60 days to $4.03.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.
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Telefonica (TEF) Surges 10.1% YTD: Will the Uptrend Continue?
Telefonica (TEF - Free Report) witnessed strong momentum this year, with shares gaining 10.1% year to date compared with the sub-industry’s rise of 2%.
Telefonica provides mobile and fixed communication services in Europe and Latin America. The company continues to invest heavily in deploying and transforming its network to provide excellent connectivity in all dimensions, capacity, speed, coverage and security.
Image Source: Zacks Investment Research
Catalysts Behind the Price Surge
Let’s delve deeper to unearth the factors working in favor of this Zacks Rank #3 (Hold) stock.
The increase in share price is driven by the company’s robust financial performance. The company came up with an impressive performance in second-quarter 2023.
The company reported a second-quarter 2023 net income of €462 million compared with €320 million in the year-ago quarter. Further, basic earnings per share (EPS) were €0.07 compared with €0.05 in the prior-year quarter. Quarterly total revenues increased 0.9% year over year to €10,133 million. Organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 3.3% year over year to €11,667 million.
The company’s performance benefits from solid momentum across Telefonica Tech and Telefonica Brazil business segments. In the second quarter, revenues in Telefonica Brazil grew 4.7% to €2,362 million, mainly due to the momentum in mobile revenues and the progressive update on tariffs.
The company’s 5G network provides almost 86% of the population in Spain with advanced mobile Internet services, streamlining the entire communications infrastructure of the country. In the second quarter, the company announced the launch of a new OTT proposal, Movistar Plus+, which is available to the entire TV market. In Spain, Bluevia plans to increase its fiber coverage to 5 million by 2024.
Also, the company has reportedly entered into a deal to digitally transform Bodegas Borsao, a Spanish company with more than 2,100 hectares of vineyards and 375 winegrowers, to make the latter’s operational and logistical processes more efficient.
The company pursues strategic collaboration to expand its footprint. In July, Telefonica announced that it is collaborating with Celo Foundation to decentralize the Celo platform, which will help improve the Celo blockchain’s security.
Also, the company has an impressive VGM Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.
Despite solid demand, the company is prone to several risks. The company operates in various places throughout the world, which makes it exposed to unfavorable forex dynamics.
Stocks to Consider
Some better-ranked stocks in the broader technology space are Watts Water Technologies (WTS - Free Report) , Aspen Technology (AZPN - Free Report) and Woodward (WWD - Free Report) . Aspen Technology and Woodward sport a Zacks Rank #1 (Strong Buy), whereas Watts Water carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Watts Water’s 2023 EPS has increased 5.8% in the past 60 days to $7.61. The company’s long-term earnings growth rate is 8%.
Watts Water’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 12.5%. Shares of WTS have rallied 28.3% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2024 EPS has increased 5.8% in the past 60 days to $6.58
Aspen Technology’s long-term earnings growth rate is 17.1%. Shares of AZPN have surged 63.7% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 12.6% in the past 60 days to $4.03.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 27.2% in the past year.