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Deutsche Telekom AG ADR DTEGY

Morningstar Rating
$23.89 +0.13 (0.55%)
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Company Report

Deutsche Telekom Earnings: Strong 2024 Guidance Suggests Higher Free Cash Flow Generation

Narrow-moat Deutsche Telekom's results were satisfactory as expected. Management met all its guidance targets, gave a healthy outlook for 2024, and raised its dividend by 10% to EUR 0.77 per share, which had been announced in third-quarter 2023. For 2024, Deutsche Telekom expects adjusted EBITDA after leases to grow 6% to EUR 42.9 billion, compared with EUR 40.5 billion in 2023, and free cash flow to be up to EUR 19 billion from EUR 16 billion in 2023 as capital spending in the United States keeps declining. Execution in the U.S. and Germany remains strong. T-Mobile U.S. grew EBITDAaL by 3% due to higher service revenue and cost-controls. In Germany, Deutsche Telekom continues gaining market share from Vodafone in mobile and broadband, with EBITDAaL up 4.1% year over year. We maintain our EUR 25 fair value estimate for Deutsche Telekom. Despite Deutsche Telekom shares providing less upside than other European telecom companies under our coverage, it remains one of our preferred stocks. We like Deutsche Telekom’s strong competitive position in its core markets, reasonable dividend yield (3.5% as of Feb. 23), and its Exemplary Morningstar Capital Allocation Rating.

Price vs Fair Value

DTEGY is trading at a 9% discount.
Price
$23.76
Fair Value
$27.00
Uncertainty
Medium
1-Star Price
$84.90
5-Star Price
$22.90
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

The merger of T-Mobile US with Sprint has been a game-changer for the U.S. wireless industry. Larger scale, synergies, and a good spectrum position will ensure good returns on capital for the next decade.

Bears

The core 2.5 GHz spectrum T-Mobile US is using is composed of many small regional licenses that are leased from educational institutions. Other firms have been trying to acquire some of this spectrum.

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News

Trading Information

Previous Close Price
$23.76
Day Range
$23.8323.95
52-Week Range
$20.1325.55
Bid/Ask
$23.88 / $23.89
Market Cap
$118.99 Bil
Volume/Avg
64,122 / 221,623

Key Statistics

Price/Earnings (Normalized)
13.66
Price/Sales
0.99
Dividend Yield (Trailing)
3.23%
Dividend Yield (Forward)
3.23%
Total Yield
3.23%

Company Profile

Deutsche Telekom is the incumbent telecom operator in Germany and remains the dominant player in both mobile and fixed markets. It also owns a controlling stake in T-Mobile US—one of three primary wireless carriers in the United States—which merged with Sprint in 2020, consolidating the market from four to three operators. Aside from its two core markets, Deutsche Telekom also has operations in several Central European countries and holds an IT arm (Systems Solutions).
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Core
Total Number of Employees
204,856

Competitors

Valuation

Metric
DTEGY
T
VZ
Price/Earnings (Normalized)
13.667.048.51
Price/Book Value
1.801.171.84
Price/Sales
0.991.011.26
Price/Cash Flow
2.923.024.48
Price/Earnings
DTEGY
T
VZ

Financial Strength

Metric
DTEGY
T
VZ
Quick Ratio
0.860.330.51
Current Ratio
0.990.710.69
Interest Coverage
2.833.964.01
Quick Ratio
DTEGY
T
VZ

Profitability

Metric
DTEGY
T
VZ
Return on Assets (Normalized)
2.65%4.17%4.66%
Return on Equity (Normalized)
14.62%16.72%18.99%
Return on Invested Capital (Normalized)
4.71%8.19%7.89%
Return on Assets
DTEGY
T
VZ
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Economic Moat
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