StockCall Technical Research on Telefonica and France Telecom: The European Economic Factor

Feb 06, 2013, 08:00 ET from

LONDON, February 6, 2013 /PRNewswire/ --

Investing in foreign company stocks is a good way to diversify a portfolio. It helps in neutralizing the impact of local economic and legal factors. However, at the very same time, it is rather complex to properly analyze these equities. Even major company stocks like Telefonica SA (NYSE: TEF) may start performing badly in the changing technological environment. The company is currently struggling to remain afloat amongst deteriorating economic milieu in Europe. Similarly, France Telecom (NASDAQ: FTE) is also facing regulatory issues in Europe and its home country, France. However, these companies are looking to pump up their infrastructure and are making capital outlays for this purpose. These steps are likely to bring respite to their stock prices. StockCall analysts have recently posted complimentary reports on Telefonica and France Telecom. Sign up now to download these technical analyses at  

Telefonica SA Loses Market Share

Telefonica SA is mainly operational in Latin America and thus offers diversification benefit to your portfolio. However, lately, the company has not been performing up to mark. In 2012, the company not only lost market share, but also had to resort to mass layoffs in order to contain costs. The impact of these developments is clearly visible on its stock price. The company margins are likely to remain under pressure due to continuing economic weakness in European markets and globally. Sign up today to read our free research on Telefonica at

Telefonica is largely the victim of constantly changing technological environment in telecommunications sector. The company is still struggling to get a foothold in internet and TV market. As a result, Telefonica reported that it would not be paying any dividend in the near future. The company is also struggling to keep up its margins as it currently has 9.6 percent net margin, substantially lower than healthy net margin.

Telefonica's dividend cut is likely to help in reducing its debt costs. The company also inked a new deal with Alcatel Lucent to overhaul its infrastructure. However, Telefonica's fortune is largely dependent on Europe making an economic turnaround.

Nonetheless, with new collaborations and cost containment, the company can bring its margins on tracks, thereby giving a boost to its stock price.

France Telecom to Reduce Dividend Payment

France Telecom boasts of mouthwatering dividend yield of over 13 percent, though the stock performed somewhat iffy during 2012. The company enjoys near monopoly in its home market, France and it offers its services in 33 countries globally. After the recent decline in share price value, the stock offers a good entry point. Register now and download the complimentary technical research on France Telecom at

France Telecom reported lower revenue for the third quarter and its future outlook remains conservative, mainly due to regulatory uncertainties in Europe. The company is also under investigation in France for its alleged collusion with France's ex finance minister Christine Lagarde. Other area of concern for France Telecom is the constant decline in call termination rates in various countries including Spain.

France Telecom stock is currently trading at P/E ratio of 5.92, significantly discounted in comparison to the industry average of 9.9. Though, it currently commands good dividend yield, the company is looking to reduce its dividends in order to reduce its debt burden. This step may render the stock unattractive for a while but in the long-run, the results are expected to be positive for the company and its stock. France Telecom is also looking to make capital expenditure in order to overhaul its operations.

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