Telefonica Brasil (VIV) AI Stock Analysis

162 Followers

Top Page

Telefonica Brasil

(NYSE:VIV)

77Outperform

Telefonica Brasil displays a strong overall financial performance with consistent growth and efficient operations. The technical analysis presents mixed signals but suggests potential for upward movement. The valuation is attractive with a reasonable P/E ratio and solid dividend yield. The recent earnings call highlighted strong growth, despite some challenges. Overall, the company is well-positioned within the telecommunications industry, offering a balanced risk-reward profile.

Positive Factors

Financial Performance

Vivo reported positive 3Q results across the board, meeting above-consensus numbers with better underlining trends.

Operational Efficiency

Concession migration should be positive for Vivo, allowing optimization of capex/opex and migration of customers to other technologies.

Shareholder Confidence

Vivo announced a new buyback program of up to R$1.8bn in shares, indicating confidence in the company's value.

Negative Factors

Mobile Revenue

Vivo reported soft results due to a deceleration in mobile and pressured margins.

Telefonica Brasil (VIV) vs. S&P 500 (SPY)

Market Cap

$13.97B

Dividend Yield2.78%

Average Volume (3M)950.31K

Price to Earnings (P/E)14.0

Beta (1Y)0.35

Revenue Growth-0.47%

EPS Growth1.69%

CountryUS

Employees32,759

SectorCommunication Services

Sector Strength76

IndustryTelecommunications Services

Share Statistics

EPS (TTM)0.62

Shares Outstanding1,630,643,700

10 Day Avg. Volume896,333

30 Day Avg. Volume950,313

Financial Highlights & Ratios

PEG Ratio8.30

Price to Book (P/B)N/A

Price to Sales (P/S)1.47

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$9.08

Price Target Upside8.74% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Telefonica Brasil Business Overview & Revenue Model

Company DescriptionTelefonica Brasil S.A. (VIV), operating under the brand name Vivo, is a leading telecommunications company in Brazil. The company offers a wide range of services, including mobile and fixed-line telecommunications, broadband internet, and digital television. Operating in the highly competitive telecommunications sector, Telefonica Brasil is recognized for its extensive network coverage and a broad portfolio of services tailored to both residential and corporate customers.

How the Company Makes MoneyTelefonica Brasil primarily generates revenue through its telecommunications services, with a significant portion coming from its mobile segment, which includes voice, data, and value-added services such as messaging and content. The company also earns revenue from its fixed-line services, offering broadband internet, fixed voice, and pay-TV services. Another key revenue stream is its corporate solutions, providing integrated communication services to businesses. In addition to its core offerings, Telefonica Brasil benefits from strategic partnerships and collaborations that enhance its service portfolio and expand its customer base. The company's extensive network infrastructure and customer-centric service models are instrumental in driving its earnings.

Telefonica Brasil Financial Statement Overview

Summary

Telefonica Brasil presents a strong financial position with consistent revenue and profit growth, supported by effective cost management and operational efficiency. The balance sheet remains stable, with a sound equity base and manageable debt levels. Cash flows are robust, providing ample liquidity for operations and strategic investments. While the company shows commendable financial health, monitoring debt levels and sustaining growth momentum will be key to future success.

Income Statement

Very Positive

Telefonica Brasil has shown strong revenue growth with a consistent upward trend from 2020 to 2024, achieving a Revenue Growth Rate of 7.19% in the last year. The Gross Profit Margin is robust, consistently above 40%, indicating efficient production and service delivery. Net Profit Margin has improved to 9.94%, reflecting effective cost management and profitability enhancements. EBIT and EBITDA margins are healthy, demonstrating strong operational efficiency and capacity to generate cash. Overall, the income statement reflects solid growth and profitability.

Balance Sheet

Positive

The company's Debt-to-Equity Ratio has been stable, suggesting a balanced approach to leveraging debt for growth without over-reliance. Return on Equity stands at 7.95%, which indicates reasonable profitability on shareholders' investments. The Equity Ratio is strong, with shareholders' equity constituting over 55% of total assets, pointing to a stable financial structure. However, the increase in total debt over recent years warrants attention to maintain financial flexibility.

Cash Flow

Very Positive

Telefonica Brasil demonstrates robust cash flow generation with a strong Operating Cash Flow to Net Income ratio, reflecting efficient conversion of income into cash. The Free Cash Flow to Net Income ratio is healthy, supporting dividend payments and potential investments. Free Cash Flow Growth Rate is positive, indicating improving cash generation capability. The company efficiently manages its capital expenditures, balancing growth investments with cash flow preservation.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
55.85B	52.10B	48.04B	44.03B	43.13B
	Gross Profit
24.49B	22.68B	20.61B	36.04B	30.07B
	EBIT
8.67B	7.92B	6.60B	7.09B	6.58B
	EBITDA
21.54B	19.52B	19.82B	19.00B	18.01B
	Net Income Common Stockholders
5.55B	5.03B	4.09B	6.24B	4.77B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
6.69B	4.36B	2.27B	6.45B	5.76B
	Total Assets
124.94B	120.74B	119.12B	115.74B	108.74B
	Total Debt
20.75B	18.74B	19.30B	16.93B	13.24B
	Net Debt
14.06B	14.38B	17.03B	10.48B	7.48B
	Total Liabilities
55.14B	51.11B	50.67B	45.66B	39.18B
	Stockholders Equity
69.73B	69.57B	68.40B	70.01B	69.56B
Cash Flow		Free Cash Flow
10.55B	9.97B	9.05B	8.78B	11.05B
	Operating Cash Flow
19.88B	18.79B	18.94B	18.07B	19.34B
	Investing Cash Flow
-8.91B	-7.85B	-14.20B	-8.13B	-6.41B
	Financing Cash Flow
-8.63B	-8.85B	-8.91B	-9.26B	-10.56B

Telefonica Brasil Technical Analysis

Technical Analysis Sentiment

Negative

Last Price8.35

Price Trends

50DMA

8.68

Negative

100DMA

8.33

Positive

200DMA

8.60

Negative

Market Momentum

MACD

0.06

Negative

RSI

53.04

Neutral

STOCH

49.02

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VIV, the sentiment is Negative. The current price of 8.35 is below the 20-day moving average (MA) of 8.75, below the 50-day MA of 8.68, and below the 200-day MA of 8.60, indicating a bearish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 53.04 is Neutral, neither overbought nor oversold. The STOCH value of 49.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for VIV.

Telefonica Brasil Risk Analysis

Telefonica Brasil disclosed 41 risk factors in its most recent earnings report. Telefonica Brasil reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Telefonica Brasil Peers Comparison

Overall Rating

UnderperformOutperform

Sector (58)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TIMB	82 Outperform	$6.92B	12.58	12.04%	3.05%	-0.91%	1.51%
VIV	77 Outperform	$13.97B	14.00	7.95%	2.78%	-0.47%	1.69%
TLK	73 Outperform	$14.17B	9.52	16.61%	6.02%	-2.99%	-7.36%
VOD	71 Outperform	$21.30B	8.29	4.31%	8.19%	-24.84%	-74.77%
SKM	69 Neutral	$8.09B	8.99	11.19%	5.38%	-2.34%	12.31%
TEF	64 Neutral	$26.63B	―	<0.01%	5.13%	1.18%	―
Sector *	58 Neutral	$24.96B	3.11	-10.53%	4.28%	2.32%	-43.03%

* Communication Services Sector Average

Performance Comparison

VIV

Telefonica Brasil

8.35

-1.18

-12.38%

TLK

PT Telekomunikasi Indonesia Tbk

13.72

-6.67

-32.71%

SKM

Sk Telecom

21.08

-0.13

-0.61%

TEF

Telefonica

4.44

0.34

8.29%

TIMB

TIM

14.59

-2.66

-15.42%

VOD

Vodafone

8.35

0.41

5.16%

Telefonica Brasil Earnings Call Summary

Earnings Call Date: Feb 25, 2025 | % Change Since: -7.12% | Next Earnings Date: May 12, 2025

Earnings Call Sentiment Positive

Vivo demonstrated strong growth in mobile and fiber segments, increased shareholder remuneration, and notable ESG achievements. However, challenges persist with prepaid revenue softness, fixed voice migration costs, and rising operating expenses.

Highlights

Strong Mobile and Fiber Growth

Vivo reached 66.5 million postpaid access in 2024 with a growth of 7.6%. The number of homes connected to fiber grew 12.7%, totaling 7 million access, contributing to the largest customer base in company history with over 116 million access.

Revenue and EBITDA Growth

Total revenues increased by 7.7% in Q4, with mobile revenues growing 7% and fixed revenues up 8%. EBITDA increased by 7.8% year-over-year.

Shareholder Remuneration and Cash Flow

Vivo paid over BRL5.8 billion to shareholders, a 22% increase year-over-year, representing 105% of net income. Operating cash flow grew 11% year-over-year to BRL13.7 billion, representing 24.6% of total revenues.

ESG Accomplishments

Vivo joined the Dow Jones Best-in-Class World Index, being the only Brazilian telco on the list. The Vivo Recicle program achieved a new record of 37 tonnes collected, three times last year's amount.

Lowlights

Prepaid Revenue Challenges

Prepaid segment showed a softer performance in Q4 due to migration to hybrid plans and absence of new price increases, impacting prepaid revenue growth.

Fixed Voice Migration Costs

The fixed voice migration process involves significant OpEx and CapEx, with negative free cash flow from copper-based services impacting overall business profitability.

Rising Operating Expenses

Total OpEx grew 7.7% year-over-year, with commercial and infrastructure costs increasing due to preparation for the fixed voice migration and high commercial activity.

Company Guidance

In Vivo's Fourth Quarter 2024 earnings call, the company reported robust growth across various metrics, highlighting a solid overall performance. They achieved a 7.6% growth in postpaid access, reaching 66.5 million, and a 12.7% increase in fiber connections, totaling 7 million. Vivo's total customer base surpassed 116 million accesses, marking the largest in its history. Total revenues climbed by 7.7% in the fourth quarter, with mobile revenues growing 7% and fixed revenues by 8%. This revenue expansion contributed to a 7.8% year-over-year increase in EBITDA. The company invested BRL 9.2 billion in 2024, which resulted in an operating cash flow of BRL 13.7 billion, up 11% year-over-year, representing nearly 25% of total revenues. Shareholder remuneration was significant, with BRL 5.8 billion paid out, reflecting a 22% growth year-over-year and amounting to 105% of the net income, aligning with Vivo's guidance for the upcoming years.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.