TEO  Telecom Argentina Stet - Franc...

Exchange

NYSE

Sector

Public Utilities

Industry

Telecommunications Equipment

Market Cap.

4.39B

Vuru Grade

52.92/100

Current Price

$22.66
-0.50 (-2.16%)

Growth Price

$25.33
Undervalued by 11.79%

Stability Price

$11.81
Overvalued by 47.88%

Company Metrics

  • P/E 16.97
  • P/S 1.30
  • P/B 3.57
  • EPS 1.35
  • Cash ROIC 4.80%
  • Cash Ratio 0.34
  • Dividend 0.71 / 3.07 %
  • Avg. Vol. 115,433.00
  • Shares 193.73M
  • Market Cap. 4.39B

Company Description

Telecom Argentina S.A., through its subsidiaries, provides fixed-line telecommunication services and other related services in Argentina. It operates in two segments, Fixed Telephony and Wireless Services. The Fixed Telephony segment provides local fixed telephony, long-distance telephony, and public telephony services; sale of prepaid calling cards and installation of local access lines; internat... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Telecom Argentina SA ADR TEO (US: NYSE)
Wall Street Journal - Feb 11, 2011
Telecom Argentina S.A. ADR TEO (U.S.: NYSE). search. View All companies. AT CLOSE 4:06 PM EDT 04/18/17. $22.34 USD; -0.03 -0.13%.
Telecom Argentina SA (ADR) (TEO) EPS Estimated At $0.34, Rollins, Inc. (ROL ...
NormanObserver.com - Apr 28, 2017
Analysts expect Telecom Argentina SA (ADR) (NYSE:TEO) to report $0.34 EPS on May, 11 before the open.They anticipate $0.01 EPS change or 3.03% from last quarter's $0.33 EPS.
Telecom Argentina's (TEO) Management on Q4 2016 Results - Earnings Call Transcript
Seeking Alpha - Mar 10, 2017
Good day everyone, and welcome to the Telecom Argentina TEO Fourth Quarter 2016 Earnings Conference Call. Today's call is being recorded.
JPMorgan Upgrades Telecom Argentina, Sees 6% Upside Due To 'Unfrozen Wireline ...
Benzinga - May 12, 2016
JPMorgan has upgraded Telecom Argentina SA (ADR) (NYSE: TEO) to Neutral from Underweight, saying "unfrozen wireline tariffs will lead to real EBITDA growth.
Telecom Argentina SA announces dividends for the fiscal year ended on December ...
PR Newswire (press release) - Apr 30, 2015
BUENOS AIRES, Argentina, April 29, 2015 /PRNewswire/ -- Telecom Argentina S.A. ("Telecom Argentina" or the "Company") (BASE: TECO2, NYSE: TEO), one of Argentina's leading telecommunications groups, announced that the General Ordinary Shareholders ...
Agf Investments Has Increased Its Bank Of Montreal (BMO) Stake, 4 Analysts ...
Thorold News - Apr 26, 2017
Telecom Argentina had 10 analyst reports since July 28, 2015 according to SRatingsIntel. The firm earned “Neutral” rating on Thursday, May 12 by JP Morgan.
Telecom Argentina: Strong Economics, Little Debt And Undervalued With Catalyst ...
Seeking Alpha - May 26, 2015
Unlike America Movil and Telefonica, which are present in multiple markets across Latin America and Europe, Telecom Argentina has its main focus in Argentina, with a minor presence in neighboring Paraguay. The stock has been negatively affected by its ...
Morgan Stanley Ups Telecom Argentina To Buy
Barron's (blog) - Sep 6, 2016
As a bit of background, in March Fintech was given approval to buy Telecom Italia's controlling stake on Telecom Argentina, and in April it appointed new board members and a new CEO and CFO. Fintech also owns Argentina's biggest cable operator ...
Double Your Dividend Return On Telecom Argentina By Investing In Its Parent
Seeking Alpha - Feb 12, 2016
Telecom Argentina is undervalued but has a strong competitive position, good economics, a healthy balance sheet and an interesting dividend, providing both capital appreciation and dividend return opportunities.
Telecom Argentina SA announces consolidated first quarter results for fiscal ...
PR Newswire (press release) - May 5, 2015
Telecom Argentina ('Telecom') - (NYSE: TEO; BASE: TECO2), one of Argentina's leading telecommunications companies, announced today a Net Income of P$1,041 million for the period ended March 31, 2015, or +14.9% when compared to the same period last year ...
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for TEO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate TEO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$22.66 Current Price

$25.33 Growth Price (DCF)

Undervalued by 11.79%


Growth Rate Assumed by Market: -500.00%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$11.81 Stability Price (EPV)

Overvalued by 47.88%


Discount Rate: 15.0%

$11.61 Book Price

Overvalued by 48.75%


Poor Cash Return on Invested Capital over the past 5 years

TEO has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

TEO has only created $4.80 of cash for every $100 invested.
Figures in ARS. Fiscal year ends in December
20122013201420152016
Free Cash Flow 1.70B 2.94B -3.38B -1.90B 26.00M
divided by
Invested Capital 8.20B 8.73B 16.34B 19.25B 25.71B
Cash ROIC 20.76% 33.70% -20.70% -9.88% 0.10%

Excellent Return on Equity over the past 5 years

Over the past 5 years, TEO has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

TEO has generated $24.32 of Earnings for every $100 of Shareholders' Equity.
Figures in ARS. Fiscal year ends in December
20122013201420152016
Net Income 2.73B 3.25B 3.73B 3.44B 4.01B
divided by
Stockholders' Equity 9.96B 11.78B 14.42B 17.19B 19.34B
Return on Equity 27.43% 27.62% 25.86% 19.98% 20.71%

Good Business Performance over the past 10 years

It's likely TEO has been unable to maintain profitability in tough economic times, making it a somewhat cyclical business. The other possibility is TEO has expended significant capital on items such as property, plant and equipment in specific years. Look for correlations.

TEO has created positive free cash flow for 7 or 8 of the past 10 years.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 1.70B 1.77B 1.81B 2.49B 3.22B 1.70B 2.94B -3.38B -1.90B 26.00M

Weak Balance Sheet

TEO's financial position is not ideal. The key is to check whether TEO is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 992.25M 1.13B 1.29B 1.39B 2.82B 3.72B 5.35B 878.00M 2.30B 5.70B
Current Assets 2.38B 2.59B 2.94B 3.62B 5.45B 6.99B 9.75B 6.39B 11.49B 15.56B
Total Assets 9.17B 9.65B 10.63B 12.32B 15.32B 17.81B 23.13B 26.32B 38.47B 47.91B
Current Liabilities 3.64B 4.06B 4.17B 4.51B 5.52B 5.88B 9.05B 9.10B 16.91B 16.51B
Total Liabilities 6.14B 5.63B 5.20B 5.92B 7.30B 7.85B 11.35B 11.90B 21.27B 28.58B
Stockholder' Equity 3.03B 4.02B 5.44B 6.40B 8.02B 9.96B 11.78B 14.42B 17.19B 19.34B
Current Ratio 0.65 0.64 0.71 0.80 0.99 1.19 1.08 0.70 0.68 0.94
TL-to-TA 0.67 0.58 0.49 0.48 0.48 0.44 0.49 0.45 0.55 0.60

Consistent Reinvestment of Profits over the past 10 years

TEO has consistently retained profits. This may put TEO in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, TEO can greatly improve their long-term economic picture.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings - 348.00M 1.66B 2.35B 3.85B 3.06B 3.20B 3.67B 3.40B 3.98B
Retained Earnings Growth - - 376.44% 41.44% 64.26% -20.69% 4.81% 14.71% -7.35% 16.81%

Potential Competitive Advantage over the past 10 years

TEO potentially has a competitive advantage. This could be strong branding, the ability to keep costs low, or some other characteristic that is hard to replicate. Look at its future prospects to determine sustainability and whether the economic moat will strengthen.

$10.84 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 882.00M 961.00M 1.41B 1.94B 2.51B 2.73B 3.25B 3.73B 3.44B 4.01B
divided by
Revenue 9.08B 10.61B 12.23B 14.66B 18.55B 22.20B 27.35B 33.39B 40.54B 53.32B
Net Profit Margin 9.72% 9.06% 11.49% 13.20% 13.54% 12.31% 11.90% 11.17% 8.47% 7.51%

Varying Pricing Power over the past 10 years

TEO has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$75.93 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 4.11B 4.96B 6.13B 14.66B 18.55B 20.49B 21.70B 26.24B 33.78B 44.58B
divided by
Revenue 9.08B 10.61B 12.23B 14.66B 18.55B 22.20B 27.35B 33.39B 40.54B 53.32B
Gross Margin 45.30% 46.76% 50.11% 100.00% 100.00% 92.31% 79.35% 78.58% 83.31% 83.61%

High Capital Intensity over the past 10 years

TEO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

161.61% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 1.24B 1.55B 1.47B 1.76B 2.18B 3.33B 4.20B 9.10B 8.71B 11.34B
divided by
Net Income 882.00M 961.00M 1.41B 1.94B 2.51B 2.73B 3.25B 3.73B 3.44B 4.01B
Capital Expenditure Ratio 141.07% 160.87% 104.91% 90.85% 86.71% 121.74% 129.01% 244.14% 253.68% 283.12%

Very Strong Dividend History over the past 10 years

TEO has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests TEO is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 37.80M 20.00M 19.00M 1.05B 915.00M 830.00M 981.00M 1.30B 849.00M 2.00B
divided by
Shares Outstanding 196.00M 196.88M 196.88M 196.88M 196.88M 196.88M 195.79M 193.83M 193.83M 193.83M
Dividend Paid Per Share 0.05 0.03 0.02 1.35 1.17 1.06 1.26 1.69 1.10 2.60
Price at Year End 20.08 7.40 14.87 23.67 17.88 11.29 17.10 19.47 16.61 18.17
Dividend Yield 0.24% 0.35% 0.16% 5.69% 6.54% 9.40% 7.37% 8.66% 6.64% 14.29%

History of Stock Buybacks over the past 10 years

TEO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in ARS. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 196.00M 196.88M 196.88M 196.88M 196.88M 196.88M 195.79M 193.83M 193.83M 193.83M
Stock Bought Back - -0.45% - - - - 0.56% 1.01% - -
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