Telefonica Q3 Earnings Surpass Estimates, Revenues Decline Y/Y

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%.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.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 UnitsTelefonica 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 QuoteTelefonica 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 DetailsQuarterly 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 & LiquidityFor 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 ReconfirmedThe 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 RankTelefonica 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 CompaniesItron 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)Free: 5 Stocks to Buy As Infrastructure Spending SoarsTrillions of dollars in Federal funds have been earmarked to repair and upgrade America’s infrastructure. In addition to roads and bridges, this flood of cash will pour into AI data centers, renewable energy sources and more.In, you’ll discover 5 surprising stocks positioned to profit the most from the spending spree that’s just getting started in this space.Download How to Profit from the Trillion-Dollar Infrastructure Boom absolutely free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Itron, Inc. (ITRI): Free Stock Analysis Report Telefonica SA (TEF): Free Stock Analysis Report Western Digital Corporation (WDC): Free Stock Analysis Report Watts Water Technologies, Inc. (WTS): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks