DCF Studio

    TEF.MC · MCE · Communication Services

    Telefónica, S.A.

    Also onConsensus Drift

    Implied value per share

    EUR 1.47

    Market price

    EUR 3.57

    Implied upside

    -58.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedSome line items were not reported and have been derived. Each one is labelled in the workings below.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR 1.47-58.9%
    Exit multiple
    EUR 3.25-8.9%
    Market price
    EUR 3.57

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn2bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 33.6bnEUR 32.2bnEUR 30.8bnEUR 29.5bnEUR 28.3bn-4.2%
    EBITEUR 2.9bnEUR 2.8bnEUR 2.7bnEUR 2.6bnEUR 2.5bn-4.2%
    NOPATEUR 2.3bnEUR 2.2bnEUR 2.1bnEUR 2.0bnEUR 1.9bn-4.2%
    Add depreciation & amortisationEUR 7.2bnEUR 6.9bnEUR 6.6bnEUR 6.3bnEUR 6.1bn-4.2%
    Less capital expenditureEUR -5.0bnEUR -4.8bnEUR -4.6bnEUR -4.4bnEUR -4.2bn-4.2%
    Less increase in working capitalEUR -1.2bnEUR -1.1bnEUR -1.1bnEUR -1.1bnEUR -1.0bn-4.2%
    Free cashflow to firmEUR 3.3bnEUR 3.2bnEUR 3.1bnEUR 2.9bnEUR 2.8bn-4.2%
    Discount factor0.97350.92250.87430.82850.7852-
    Present valueEUR 3.2bnEUR 2.9bnEUR 2.7bnEUR 2.4bnEUR 2.2bn-9.2%
    Present Value Of The ForecastEUR 13.5bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.524Reported 0.289, pulled toward 1.0 (Blume)
    Cost of equity7.60%Risk-free + beta x equity risk premium
    Cost of debt5.78%Interest expense / average total debt
    Market capitalisationEUR 20.1bn33.6% of capital
    Total debtEUR 39.7bn66.4% of capital, book value as a proxy
    Tax rate22.7%Effective, capped at statutory
    WACC5.52%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareEUR 1.47

    67% of EV

    Forecast FCFF, final year
    EUR 2.8bn
    Capex at depreciation, working capital in reinvestment
    EUR 1.9bn
    Less reinvestment at g/ROIC (45.3% of NOPAT)
    EUR -862.3m
    Capitalised
    EUR 1.0bn
    ROIC (WACC floor)
    5.5%
    Terminal value, undiscounted
    EUR 35.4bn
    Terminal value, discounted
    EUR 27.8bn
    Enterprise value
    EUR 41.2bn
    Less net debt
    EUR 32.9bn
    Equity value
    EUR 8.3bn

    Exit at 5.6x EBITDA

    Value per shareEUR 3.25

    74% of EV

    Terminal value, undiscounted
    EUR 48.2bn
    Terminal value, discounted
    EUR 37.8bn
    Enterprise value
    EUR 51.3bn
    Less net debt
    EUR 32.9bn
    Equity value
    EUR 18.4bn

    Spread between methods: 76%.

    Sensitivity

    Value per share (EUR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    3.52%5.455.876.658.85136.78
    4.52%2.812.842.872.902.93
    5.52%1.421.441.471.491.52
    6.52%0.450.470.490.510.53
    7.52%-0.26-0.25-0.23-0.21-0.20

    Outlined: this model. Green text: above today's price of 3.57. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-4.2%-0.6%+3.6pp
    EBIT margin8.7%11.5%+2.8pp
    Discount rate5.5%4.1%-1.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.