Telefonica, S.A. (TEF - Free Report) reported unimpressive fourth-quarter 2019 results, with the top line declining on a year-over-year basis. The company’s shares fell 1.48% in yesterday’s trading session to close at $6.75.
Net Loss
In the December quarter, the Spanish telecom giant’s net loss was €202 million or a loss of €0.05 per share ($223.6 million or 6 cents per share) against net income of €610 million or €0.11 per share in the year-ago quarter. In 2019, net income plunged 65.7% year over year to €1,142 million or €0.17 per share. On an adjusted basis, fourth-quarter net income per share came in at €0.18 (20 cents).
Telefonica SA Price, Consensus and EPS Surprise
Revenues
Quarterly aggregate revenues declined 4% year over year to €12,400 million ($13,728.3 million) due to changes in the perimeter and the effect of currency depreciation. However, organic revenues moved up 2% year over year on the back of sustained service revenue growth and handset sales. In 2019, revenues inched down 0.6% year over year to €48,422 million.
Quarterly Results by Business Units
Telefonica Espana: Revenues in Spain inched up 0.4% year over year on a reported basis to €3,266 million ($3,615.9 million), driven by service revenue growth. OIBDA margin was 41.9% compared with 29.7% in the year-ago quarter, which reflects improved operating expenses.
Telefonica Deutschland: Revenues climbed 0.2% to €1,970 million ($2,181 million) backed by the performance of the O2 Free portfolio, further easing of legacy base headwinds partly offset by ongoing regulatory impacts and a slight decline in handset sales. OIBDA margin was 31.9% compared with 24.5% in the year-ago quarter, supported by contribution from improved efficiencies.
Telefonica UK: Revenues increased 4.3% year over year to €1,925 million ($2,131.2 million). This was driven by higher value handset revenues and consistent growth in Smart Metering Implementation Programme (SMIP) as well as MVNO revenues. OIBDA margin was 27% compared with 28.3% in the year-ago quarter, reflecting higher ALFs and adverse year-over-year comparisons.
Telefonica Brasil: Revenues in Brazil declined 2.1% to €2,499 million ($2,131.2 million) primarily due to the decline in voice and DTH, as a result of greater focus on IPTV. OIBDA margin increased to 45.7% from 38.4% owing to a €29 million positive impact from related to the adequacy of international intellectual property.
Telefonica Hispam Sur: Revenues in this segment declined 19.5% to €1,599 million ($1,770.3 million) mainly due to negative regulatory impacts in Chile and Peru. OIBDA margin declined to 8.2% from 24.3%.
Telefonica Hispam Norte: Revenues in the segment fell 11.7% year over year to €916 million ($1,014.1 million), affected by Ecuador’s macro-economic environment in spite of growth acceleration in Mexico and the return to positive growth in Colombia. OIBDA margin declined to 3.4% from 4.4%.
Other Details
Overall, OIBDA (operating income before depreciation and amortization) came in at €3,669 million, up 3.8% year over year. The upside can be attributed to the impact of IFRS 16 accounting standard. OIBDA margin was 29.6% compared with 27.4% in the year-ago quarter. Operating income was down 14.4% to €914 million.
Cash Flow & Liquidity
In 2019, Telefonica generated €15,022 million of net cash from operating activities compared with €13,423 million in 2018. As of Dec 31, 2019, the company had €6,042 million ($6,775.9 million) in cash and equivalents with €43,288 million ($48,546.3 million) of non-current financial liabilities compared with the respective tallies of €5,692 million and €45,334 million a year ago.
Zacks Rank & Stocks to Consider
Telefonica currently has a Zacks Rank #4 (Sell).
Few better-ranked stocks in the broader sector are PCTEL, Inc. , Motorola Solutions, Inc. (MSI - Free Report) and Qualcomm Incorporated (QCOM - Free Report) . While PCTEL sports a Zacks Rank #1 (Strong Buy), Motorola and Qualcomm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PCTEL has trailing four-quarter positive earnings surprise of 150.6%, on average.
Motorola has trailing four-quarter positive earnings surprise of 6.6%, on average.
Qualcomm has trailing four-quarter positive earnings surprise of 10%, on average.
Conversion rate used:€1 = $1.107119 (period average from Oct 1, 2019 to Dec 31, 2019)
€1 = $1.121473 (as of Dec 31, 2019)
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Telefonica, S.A. (TEF - Free Report) reported unimpressive fourth-quarter 2019 results, with the top line declining on a year-over-year basis. The company’s shares fell 1.48% in yesterday’s trading session to close at $6.75.
Net Loss
In the December quarter, the Spanish telecom giant’s net loss was €202 million or a loss of €0.05 per share ($223.6 million or 6 cents per share) against net income of €610 million or €0.11 per share in the year-ago quarter. In 2019, net income plunged 65.7% year over year to €1,142 million or €0.17 per share. On an adjusted basis, fourth-quarter net income per share came in at €0.18 (20 cents).
Telefonica SA Price, Consensus and EPS Surprise
Revenues
Quarterly aggregate revenues declined 4% year over year to €12,400 million ($13,728.3 million) due to changes in the perimeter and the effect of currency depreciation. However, organic revenues moved up 2% year over year on the back of sustained service revenue growth and handset sales. In 2019, revenues inched down 0.6% year over year to €48,422 million.
Quarterly Results by Business Units
Telefonica Espana: Revenues in Spain inched up 0.4% year over year on a reported basis to €3,266 million ($3,615.9 million), driven by service revenue growth. OIBDA margin was 41.9% compared with 29.7% in the year-ago quarter, which reflects improved operating expenses.
Telefonica Deutschland: Revenues climbed 0.2% to €1,970 million ($2,181 million) backed by the performance of the O2 Free portfolio, further easing of legacy base headwinds partly offset by ongoing regulatory impacts and a slight decline in handset sales. OIBDA margin was 31.9% compared with 24.5% in the year-ago quarter, supported by contribution from improved efficiencies.
Telefonica UK: Revenues increased 4.3% year over year to €1,925 million ($2,131.2 million). This was driven by higher value handset revenues and consistent growth in Smart Metering Implementation Programme (SMIP) as well as MVNO revenues. OIBDA margin was 27% compared with 28.3% in the year-ago quarter, reflecting higher ALFs and adverse year-over-year comparisons.
Telefonica Brasil: Revenues in Brazil declined 2.1% to €2,499 million ($2,131.2 million) primarily due to the decline in voice and DTH, as a result of greater focus on IPTV. OIBDA margin increased to 45.7% from 38.4% owing to a €29 million positive impact from related to the adequacy of international intellectual property.
Telefonica Hispam Sur: Revenues in this segment declined 19.5% to €1,599 million ($1,770.3 million) mainly due to negative regulatory impacts in Chile and Peru. OIBDA margin declined to 8.2% from 24.3%.
Telefonica Hispam Norte: Revenues in the segment fell 11.7% year over year to €916 million ($1,014.1 million), affected by Ecuador’s macro-economic environment in spite of growth acceleration in Mexico and the return to positive growth in Colombia. OIBDA margin declined to 3.4% from 4.4%.
Other Details
Overall, OIBDA (operating income before depreciation and amortization) came in at €3,669 million, up 3.8% year over year. The upside can be attributed to the impact of IFRS 16 accounting standard. OIBDA margin was 29.6% compared with 27.4% in the year-ago quarter. Operating income was down 14.4% to €914 million.
Cash Flow & Liquidity
In 2019, Telefonica generated €15,022 million of net cash from operating activities compared with €13,423 million in 2018. As of Dec 31, 2019, the company had €6,042 million ($6,775.9 million) in cash and equivalents with €43,288 million ($48,546.3 million) of non-current financial liabilities compared with the respective tallies of €5,692 million and €45,334 million a year ago.
Zacks Rank & Stocks to Consider
Telefonica currently has a Zacks Rank #4 (Sell).
Few better-ranked stocks in the broader sector are PCTEL, Inc. , Motorola Solutions, Inc. (MSI - Free Report) and Qualcomm Incorporated (QCOM - Free Report) . While PCTEL sports a Zacks Rank #1 (Strong Buy), Motorola and Qualcomm carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
PCTEL has trailing four-quarter positive earnings surprise of 150.6%, on average.
Motorola has trailing four-quarter positive earnings surprise of 6.6%, on average.
Qualcomm has trailing four-quarter positive earnings surprise of 10%, on average.
Conversion rate used:
€1 = $1.107119 (period average from Oct 1, 2019 to Dec 31, 2019)
€1 = $1.121473 (as of Dec 31, 2019)
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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