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Here's Why Investors May Consider Betting on Telefonica (TEF)
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Telefonica, S.A. (TEF - Free Report) is one stock that investors may consider adding to their portfolio to combat the highly-volatile market environment and gain from its upside potential.
Let’s look at the factors that make the stock an attractive pick.
Attractive Pricing: Wall Street is facing extreme volatility due to various macroeconomic factors, such as rising inflation and interest rate hikes by the Federal Reserve. Also, the increased crude oil prices and lingering supply-chain woes are further concerns for the economy.
The above-mentioned factors are taking a toll on major U.S. indices. Year to date, the S&P 500 have plunged 24.8%
In such a scenario, stocks such as Telefonica can be a good addition to one’s investment portfolio. TEF stock is down 40.8% from its 52-week high level of $5.39 on Apr 14, 2022, making it relatively affordable for investors.
Northward Estimate Revisions: The Zacks Consensus Estimate of 37 cents per share for fiscal 2022 earnings has increased 15.6% in the past 60 days. For fiscal 2023, the consensus mark for earnings is pegged at 38 cents per share, up 15.2% over the past 60 days.
The company expects to achieve high-end of low-single-digit growth in revenues, mid to high-end of low-single-digit growth for OIBDA, and a CapEx-to-sales ratio of up to 15%.
Telefonica reported a second-quarter 2022 net income of €320 million, plunging 95.9% year over year. Further, basic earnings per share were €0.05 compared with €1.31 in the prior-year quarter.
Quarterly total revenues increased 0.8% year over year to €10,040 million. However, organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 5.2% year over year to €11,519 million.
Strong Fundamental Drivers
Telefonica provides mobile and fixed communication services in Europe and Latin America. The company continues to invest heavily in the deployment and transformation of its network to provide excellent connectivity in all dimensions, capacity, speed, coverage and security.
In July 2022, Telefonica announced that it had formed a joint venture with InfraVia Capital Partners and Liberty Global. The partnership is focused on accelerating FTTH deployment in the UK by leveraging VMO2’s construction expertise.
Prior to that, Telefonica announced a partnership with NTT DATA and CIE Automotive to develop an integrated 5G platform. The new platform is aimed at improving the internal logistics process for automotive, manufacturing and distribution centers etc., by enabling the automatic transport of finished products from production to warehouse.
The company plans to tap the Spanish market with Solar 360 and the existing miMovistar portfolio. The company has provided security through ‘Tu Empresa Segura’ to more than 25,000 users and 125,000 devices in Spain.
Per company reports, its 5G network provides almost 80% of the population in Spain with advanced mobile Internet services.
Telefonica Infra operates as a portfolio manager owning stakes in infrastructure alongside financial investors to maximize value creation for the company. It is expected to gain momentum from the pandemic-induced boost in traffic and the emergence of the new digital era.
Few Headwinds
Apart from its solid fundamentals, the company is prone to several risks. The company operates in various places throughout the world, which makes it exposed to unfavorable forex dynamics.
Stiff competition, pandemic-induced supply-chain constraints and a leveraged balance sheet are further concerns for the company.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology space are Synopsys (SNPS - Free Report) , Pure Storage (PSTG - Free Report) and Aspen Technology (AZPN - Free Report) . Pure Storage currently sports a Zacks Rank #1 (Strong Buy), whereas Synopsys and Aspen Technology presently carry a Zacks Rank #2.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, rising 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 8.4% in the past year.
The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.85 per share, up 4.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.2%.
Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 3%. Shares of SNPS have increased 0.3% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2023 earnings is pegged at $6.77 per share, increasing 4.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.2%.
Aspen Technology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 6.2%. Shares of AZPN have increased 52.3% in the past year.
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Here's Why Investors May Consider Betting on Telefonica (TEF)
Telefonica, S.A. (TEF - Free Report) is one stock that investors may consider adding to their portfolio to combat the highly-volatile market environment and gain from its upside potential.
Let’s look at the factors that make the stock an attractive pick.
Attractive Pricing: Wall Street is facing extreme volatility due to various macroeconomic factors, such as rising inflation and interest rate hikes by the Federal Reserve. Also, the increased crude oil prices and lingering supply-chain woes are further concerns for the economy.
The above-mentioned factors are taking a toll on major U.S. indices. Year to date, the S&P 500 have plunged 24.8%
In such a scenario, stocks such as Telefonica can be a good addition to one’s investment portfolio. TEF stock is down 40.8% from its 52-week high level of $5.39 on Apr 14, 2022, making it relatively affordable for investors.
Telefonica SA Price
Telefonica SA price | Telefonica SA Quote
Solid Rank: Telefonica currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: The Zacks Consensus Estimate of 37 cents per share for fiscal 2022 earnings has increased 15.6% in the past 60 days. For fiscal 2023, the consensus mark for earnings is pegged at 38 cents per share, up 15.2% over the past 60 days.
The company expects to achieve high-end of low-single-digit growth in revenues, mid to high-end of low-single-digit growth for OIBDA, and a CapEx-to-sales ratio of up to 15%.
Telefonica reported a second-quarter 2022 net income of €320 million, plunging 95.9% year over year. Further, basic earnings per share were €0.05 compared with €1.31 in the prior-year quarter.
Quarterly total revenues increased 0.8% year over year to €10,040 million. However, organic revenues (aggregating 50% of Virgin Media O2 joint venture results) grew 5.2% year over year to €11,519 million.
Strong Fundamental Drivers
Telefonica provides mobile and fixed communication services in Europe and Latin America. The company continues to invest heavily in the deployment and transformation of its network to provide excellent connectivity in all dimensions, capacity, speed, coverage and security.
In July 2022, Telefonica announced that it had formed a joint venture with InfraVia Capital Partners and Liberty Global. The partnership is focused on accelerating FTTH deployment in the UK by leveraging VMO2’s construction expertise.
Prior to that, Telefonica announced a partnership with NTT DATA and CIE Automotive to develop an integrated 5G platform. The new platform is aimed at improving the internal logistics process for automotive, manufacturing and distribution centers etc., by enabling the automatic transport of finished products from production to warehouse.
The company plans to tap the Spanish market with Solar 360 and the existing miMovistar portfolio. The company has provided security through ‘Tu Empresa Segura’ to more than 25,000 users and 125,000 devices in Spain.
Per company reports, its 5G network provides almost 80% of the population in Spain with advanced mobile Internet services.
Telefonica Infra operates as a portfolio manager owning stakes in infrastructure alongside financial investors to maximize value creation for the company. It is expected to gain momentum from the pandemic-induced boost in traffic and the emergence of the new digital era.
Few Headwinds
Apart from its solid fundamentals, the company is prone to several risks. The company operates in various places throughout the world, which makes it exposed to unfavorable forex dynamics.
Stiff competition, pandemic-induced supply-chain constraints and a leveraged balance sheet are further concerns for the company.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology space are Synopsys (SNPS - Free Report) , Pure Storage (PSTG - Free Report) and Aspen Technology (AZPN - Free Report) . Pure Storage currently sports a Zacks Rank #1 (Strong Buy), whereas Synopsys and Aspen Technology presently carry a Zacks Rank #2.
The Zacks Consensus Estimate for PSTG 2022 earnings is pegged at $1.18 per share, rising 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have increased 8.4% in the past year.
The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.85 per share, up 4.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 16.2%.
Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 3%. Shares of SNPS have increased 0.3% in the past year.
The Zacks Consensus Estimate for Aspen Technology’s fiscal 2023 earnings is pegged at $6.77 per share, increasing 4.6% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.2%.
Aspen Technology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 6.2%. Shares of AZPN have increased 52.3% in the past year.