Does anyone look at the fundamentals of TEF, and ask themselves why a lot of investors think that TEF is NOT good value?
According to VL- TEF sells for just a little over an 8.2/1 PE, pays a great dividend, and has paid a dividend since 2003, it's financies are B+ (good but not great), had a deficit only in 2002, since 2000, and earnings have grown from $1.18 to estimates of $6.00 in 2010. VL also thinks that earnings will be $15.00 an ADR in the 2013-2015 period.
TEF is very large and stable (according to VL), is growing and has a promising future.
VL also sees a total return in the next 5-7 years of 31-41% per year for investors in this stock.
VL is correct, or the doubters are correct with this stock- which is it?
Disclosure- have a small position of 300 ADRs and would like to increase it.
Is there something that I don't see?
Can someone give the counter argument to the above?
Not sure where you got the VL estimate to be $15.00. The last VL I read had the Earnings per ADR estimated to be $10.45. I think the 25% tax from the Spanish government is probably deterring some income orientated investors along with the factors already mentioned (worry in Eurozone, competition in Latin America etc.). I only hold a very small position but am looking to add at these prices.
I have a small position in TEF and I'm optimistic about its future.
The counterpoints that I read are:
(1) Greece; and
(2) it is expected that there will be intense competition in Brasil over providers. This will lead to reduced margins in order to seal a foothold in the country, and may be all for nought if TEF is essentially outcompeted there. That would be a mean blow for their growth potential.
Even with those risks considered, I bought the stock.
I agree and have added some today. The volatility is related to the Greek crisis. Most of TEF's revenue and growth is from South America. I think by any metric it is a good buy.They have a very liberal dividend policy and these should rise over the years.These currency crises have a way of resovling themselves over the long run although there can be much short term pain.This is one to hold through the volatility IMO. RRW
The Carlos Slim news probably scared some people off as well. TEF could be seeing some more intense competition in the latin market. The good news is that there is going to be more than one big player in the market. And TEF's balance sheet is great for a telecom company.