TEO  Telecom Argentina Stet - Franc...

Exchange

NYSE

Sector

Public Utilities

Industry

Telecommunications Equipment

Market Cap.

4.30B

Vuru Grade

66.43/100

Current Price

$22.21
+0.29 (+1.32%)

Growth Price

$6.42
Overvalued by 71.10%

Stability Price

$42.87
Undervalued by 93.02%

Company Metrics

  • P/E 16.83
  • P/S 1.24
  • P/B 3.41
  • EPS 1.32
  • Cash ROIC 13.99%
  • Cash Ratio 0.14
  • Dividend 0.71 / 3.13%
  • Avg. Vol. 115,298.00
  • Shares 193.61M
  • Market Cap. 4.30B

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

News Telecom Argentina SA ADRTEO
Wall Street Journal - Feb 11, 2011
News Telecom Argentina S.A. ADRTEO. Significant News Only. 03/08/17; Press Release. Telecom Argentina S.A. announces consolidated results for the annual period ('FY16') and fourth quarter for fiscal year 2016 ('4Q16').
Telecom Argentina Upgraded At Morgan Stanley, Stock Up Over 2.5%
Benzinga - Sep 6, 2016
Shares of Telecom Argentina SA (ADR) (NYSE: TEO) traded higher on Tuesday after Morgan Stanley upgraded the stock to an Overweight rating from Equal Weight citing gains from lower capital cost and enhanced environment on pricing.
Morgan Stanley Ups Telecom Argentina To Buy - Barron's (blog)
Revenue Update on Telecom Argentina SA (ADR)(NYSE:TEO)
Money Flow Index & Trends - Mar 14, 2017
Telecom Argentina SA (ADR)(NYSE:TEO) announced the earnings results for Fiscal Year 2016 and Q4. The results came in during After-Market on Mar 8, 2017.
Analysts Watch Telecom Argentina Stet – France Telecom SA (NYSE:TEO) And Issue ... - NewsDen
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 (ADR) (NYSE:TEO) has been upgraded to Hold in a statement ...
Breaking Finance News - Mar 4, 2017
Having a price of $21.65, Telecom Argentina SA (ADR) (NYSE:TEO) traded 0.93% higher on the day. With the last stock price up 13.63% from the two hundred day average, compared with the Standard & Poor's 500 Index which has increased 0.05% over the ...
Telecom Argentina SA announces the first payment of dividends for the fiscal ...
PR Newswire (press release) - May 2, 2016
BUENOS AIRES, Argentina, May 2, 2016 /PRNewswire/ -- Telecom Argentina S.A. ("Telecom Argentina" or the "Company") (BASE: TECO2, NYSE: TEO), one of Argentina's leading telecommunications groups, announced that the Company's Board of Directors ... The ...
A statement released earlier today by Zacks Investment Research about Telecom ...
Breaking Finance News - Mar 10, 2017
Having a price of $21.98, Telecom Argentina SA (ADR) (NYSE:TEO) traded 0.92% higher on the day. With the last close up 14.28% from the two hundred day average, compared with the S&P 500 Index which has increased 0.05% over the same period.
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 ...
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 ...
Earnings Scheduled For March 9, 2017
Benzinga - Mar 9, 2017
Care.com Inc (NYSE: CRCM) is projected to report its quarterly earnings at $0.16 per share on revenue of $42.11 million. Telecom Argentina SA (ADR) (NYSE: TEO) is expected to report its quarterly earnings at $0.37 per share on revenue of $954.42 million.
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.

$22.21 Current Price

$6.42 Growth Price (DCF)

Overvalued by 71.10%


Growth Rate Assumed by Market: 500.00%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


TEO's most recent year of (normalized) free cash flow is negative. This is the base number for forward projections. This means that if you increase the growth rate, the amount of negative FCF grows, thereby decreasing the price.

Show Free Cash Flow numbers

$42.87 Stability Price (EPV)

Undervalued by 93.02%


Discount Rate: 15.0%

$13.65 Book Price

Overvalued by 38.56%


Inconsistent Cash Return on Invested Capital over the past 5 years

TEO has somewhat efficiently invested its financial resources in buildings, projects, and equipment. However, there has been some inconsistency from year-to-year. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

TEO has created $13.99 of cash for every $100 invested.
Figures in ARS. Fiscal year ends in December
20112012201320142015
Free Cash Flow 3.22B 1.70B 2.94B -3.38B -1.90B
divided by
Invested Capital 6.98B 8.20B 8.73B 16.34B 19.25B
Cash ROIC 46.08% 20.76% 33.70% -20.70% -9.88%

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 $26.44 of Earnings for every $100 of Shareholders' Equity.
Figures in ARS. Fiscal year ends in December
20112012201320142015
Net Income 2.51B 2.73B 3.25B 3.73B 3.44B
divided by
Stockholders' Equity 8.02B 9.96B 11.78B 14.42B 17.19B
Return on Equity 31.33% 27.43% 27.62% 25.86% 19.98%

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
2006200720082009201020112012201320142015
Free Cash Flow 1.53B 1.70B 1.77B 1.81B 2.49B 3.22B 1.70B 2.94B -3.38B -1.90B

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
2006200720082009201020112012201320142015
Cash 662.31M 992.25M 1.13B 1.29B 1.39B 2.82B 3.72B 5.35B 878.00M 2.30B
Current Assets 1.77B 2.38B 2.59B 2.94B 3.62B 5.45B 6.99B 9.75B 6.39B 11.49B
Total Assets 8.71B 9.17B 9.65B 10.63B 12.32B 15.32B 17.81B 23.13B 26.32B 38.47B
Current Liabilities 3.37B 3.64B 4.06B 4.17B 4.51B 5.52B 5.88B 9.05B 9.10B 16.91B
Total Liabilities 6.58B 6.14B 5.63B 5.20B 5.92B 7.30B 7.85B 11.35B 11.90B 21.27B
Stockholder' Equity 2.13B 3.03B 4.02B 5.44B 6.40B 8.02B 9.96B 11.78B 14.42B 17.19B
Current Ratio 0.52 0.65 0.64 0.71 0.80 0.99 1.19 1.08 0.70 0.68
TL-to-TA 0.76 0.67 0.58 0.49 0.48 0.48 0.44 0.49 0.45 0.55

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
2006200720082009201020112012201320142015
Retained Earnings -1.59B - 348.00M 1.66B 2.35B 3.85B 3.06B 3.20B 3.67B 3.40B
Retained Earnings Growth - 100.00% - 376.44% 41.44% 64.26% -20.69% 4.81% 14.71% -7.35%

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.

$10.42 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in ARS. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 245.30M 882.00M 961.00M 1.41B 1.94B 2.51B 2.73B 3.25B 3.73B 3.44B
divided by
Revenue 7.43B 9.08B 10.61B 12.23B 14.66B 18.55B 22.20B 27.35B 33.39B 40.54B
Net Profit Margin 3.30% 9.72% 9.06% 11.49% 13.20% 13.54% 12.31% 11.90% 11.17% 8.47%

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.

$71.51 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
2006200720082009201020112012201320142015
Gross Profit 2.93B 4.11B 4.96B 6.13B 14.66B 18.55B 20.49B 21.70B 26.24B 33.78B
divided by
Revenue 7.43B 9.08B 10.61B 12.23B 14.66B 18.55B 22.20B 27.35B 33.39B 40.54B
Gross Margin 39.36% 45.30% 46.76% 50.11% 100.00% 100.00% 92.31% 79.35% 78.58% 83.31%

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.

168.55% 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
2006200720082009201020112012201320142015
Capital Expenditure 864.68M 1.24B 1.55B 1.47B 1.76B 2.18B 3.33B 4.20B 9.10B 8.71B
divided by
Net Income 245.30M 882.00M 961.00M 1.41B 1.94B 2.51B 2.73B 3.25B 3.73B 3.44B
Capital Expenditure Ratio 352.50% 141.07% 160.87% 104.91% 90.85% 86.71% 121.74% 129.01% 244.14% 253.68%

Strong Dividend History over the past 10 years

TEO has consistently distributed a dividend for the past 9 years. This suggests TEO is established and will likely continue to distribute its dividend for the foreseeable future.
Figures in ARS. Fiscal year ends in December
2006200720082009201020112012201320142015
Dividend Paid - 37.80M 20.00M 19.00M 1.05B 915.00M 830.00M 981.00M 1.30B 849.00M
divided by
Shares Outstanding 196.24M 196.00M 196.88M 196.88M 196.88M 196.88M 196.88M 195.79M 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
Price at Year End 17.90 20.08 7.40 14.87 23.67 17.88 11.29 17.10 19.47 16.61
Dividend Yield - 0.24% 0.35% 0.16% 5.69% 6.54% 9.40% 7.37% 8.66% 6.64%

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
2006200720082009201020112012201320142015
Shares Outstanding 196.24M 196.00M 196.88M 196.88M 196.88M 196.88M 196.88M 195.79M 193.83M 193.83M
Stock Bought Back - 0.12% -0.45% - - - - 0.56% 1.01% -
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