Telefónica, S.A. (TEF.MC) stock analysis

In our weekly check, Telefónica, S.A. is graded D (A to F). Of 23 checks on debt, profit, cash flow and trend: 10 pass, warnings: 2, red flags: 11.

About Telefónica, S.A.

Telefónica, S.A. is a Communication Services company (Telecommunications Services) based in Spain, listed on BME as TEF.MC.

What our checks show for TEF.MC

Red flags

• Net debt is 5x a year of EBITDA (debt/equity 6.91). That limits room in a downturn and raises refinancing risk.
• Operating profit does not cover the interest bill (0.7x): interest is paid from cash or new debt.
• The net margin fell by 30.2 points over 5 years, to -9.5%: the company keeps less of each sale as profit.
• The gross margin fell by 61.5 points, to 7.3%: costs are rising faster than prices.
• Analysts expect revenue to shrink about 0.3% a year.
• Revenue fell 4.4% a year over the last 3 years.
• Weak EPS growth
• The company is losing money: the net margin is -9.5%.
• Telefónica, S.A. pays a dividend while losing money: it is funded from reserves or debt.
• The stock has fallen as much as 88% from a peak. Would you have held through that?
• Return on capital (ROCE) is only 2.2%.

Warning signs

• Analysts expect earnings per share to shrink about 10.4% a year.
• The stock is still below its previous peak.

Strengths

• Operating cash flow is 2.82x net profit: the profit arrives as real cash.
• Analysts expect the net margin to improve by 17 points from today's -9.5%.
• Free cash flow is 12.1% of revenue: cash for dividends, buybacks or growth.
• A large company: market value $21.53 billion.
• Beta 0.31: the stock usually moves less than the market.
• Actively traded: about 10.8 million shares a day.

Next earnings report: 2026-11-12

Similar companies

BCE · BT-A.L · VIV · RCI · CLNX.MC · ASTS

Questions

What grade does Telefónica, S.A. (TEF.MC) have?

In our weekly check, Telefónica, S.A. is graded D (A to F). Of 23 checks on debt, profit, cash flow and trend: 10 pass, warnings: 2, red flags: 11. The grade is a risk check, not a buy or sell recommendation.

What are the main risks of TEF.MC stock?

This week's biggest flags for Telefónica, S.A.: High debt, Weak interest cover, Margins falling. In total 13 of 23 checks show a warning or a red flag.

What does Telefónica, S.A. do?

Telefónica, S.A. is a Communication Services company (Telecommunications Services) based in Spain, listed on BME as TEF.MC.

When does Telefónica, S.A. report earnings next?

The next earnings report is expected on 2026-11-12. We re-run the checks every week, so the grade can change after it.

The grade is a risk check, not a price forecast, and not investment advice. In our 10-year test (S&P 500, 2016-2026), stocks we graded A or B fell more than 30% 2-3 times less often than D or F, without a lower average return.

Updated 2026-10-24

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