Telefonica Q1 Earnings Reflect Downward Trend

Telefonica reports lower Q1 profits, with earnings per share dropping to 0.06 euros. Despite the decline, they anticipate improved results by 2025. Investors should analyze the implications of these results closely.

Date: 14-05-2025

AI Rating: 5

Profit Analysis: Telefonica's Q1 results show a notable drop in profit from continuing operations, falling to 427 million euros from 576 million euros a year ago. The basic EPS also decreased to 0.06 euros, reflecting a downturn in profitability which might cause concern among investors.
Net Income and Adjusted EPS: Adjusted net income decreased by 18.7% to 544 million euros, while adjusted basic EPS dropped by 20.9% to 0.08 euros. This decline is significant as it suggests that the company is struggling to maintain its earnings power, which could lead to bearish sentiment among investors.
Revenue Growth: The company reported organic revenue growth of 1.3% to 9.22 billion euros, but reported revenue fell by 2.9% due to adverse currency effects. While the organic growth is a positive sign, it is overshadowed by the overall revenue decline, raising concerns regarding overall performance.
Free Cash Flow and EBITDA: Adjusted EBITDA at 3.01 billion euros demonstrated organic growth of 0.6% despite being negatively impacted by currency exchange. The acknowledgment of seasonal fluctuations in free cash flow could indicate volatility in capital available for dividends and reinvestment.
Dividends: The confirmation of a cash dividend of 0.30 euros per share provides some return to shareholders, but the overall decline in earnings may cause some investors to question the sustainability of dividend payouts going forward.
Overall, these mixed results could lead to an increased caution among investors, as profitability and earnings metrics are critical indicators of a company's health in the market. While the company projects an improvement by 2025, this outlook may not be sufficient to placate investors in the short term.

Stocks: TEF