Is Telecom Italia (BIT:TIT) Still Undervalued After Reaffirming 2026 Guidance And Posting A Wider Loss?

Telecom Italia (BIT:TIT) is back in focus after confirming its full year 2026 earnings guidance and reporting half year results that show higher sales and revenue alongside a wider net loss.

See our latest analysis for Telecom Italia.

Telecom Italia's recent confirmation of its 2026 guidance comes after a strong year-to-date share price return of 49.21% and a 1-year total shareholder return of 82.28%. However, the 30-day share price return is down 7.09%, which suggests short term momentum has cooled even as the 3-year total shareholder return of 196.67% reflects a much stronger long term picture.

If this update has you looking beyond Telecom Italia, it could be a good moment to broaden your watchlist with 36 power grid technology and infrastructure stocks

Telecom Italia is guiding for modest revenue growth and has delivered strong multi year shareholder returns, yet the wider net loss and recent share price pullback raise a simple question: Is the stock still priced attractively today?

DCF fair value suggests Telecom Italia could be undervalued

Based on the SWS DCF model, Telecom Italia has an estimated fair value of €11.99 per share compared with a last close of €7.55, which implies a sizeable valuation gap. That gap is central for readers who are weighing the recent share price pullback against the longer term return profile.

The SWS DCF model estimates what Telecom Italia's future cash flows could be, then discounts those back to today using a required rate of return. It produces a single fair value estimate that reflects those projected cash flows rather than near term earnings or headline multiples.

For a telecom group with established domestic and Brazilian operations, a cash flow based approach can help put shorter term swings in revenue, net income and sentiment into context. Investors can compare the current €7.55 share price with the €11.99 fair value output to judge whether the market is assigning a discount to those long term cash flow expectations.

Look into how the SWS DCF model arrives at its fair value.

Result: DCF Fair value of €11.99 (UNDERVALUED)

Price to earnings of 56.5x for Telecom Italia, is it justified?

On a P/E basis, Telecom Italia trades on 56.5x earnings, which sits well above common benchmarks for telecom stocks and suggests the market is paying a rich price for current earnings. That sits alongside the recent share price performance and raises the question of what kind of profit path investors expect to justify that level.

The P/E ratio compares the share price to earnings per share and is a quick way to gauge how much investors are paying today for each euro of Telecom Italia's earnings. A higher P/E often reflects expectations for faster profit growth or a perception of lower risk, while a lower P/E can point to more cautious expectations.

Telecom Italia's 56.5x P/E stands well above the European telecom industry average of 17.6x and the peer average of 19.7x, which is a strong premium. It is also more than double the estimated fair P/E of 25.1x that regression analysis suggests the market could move towards if expectations and pricing were more closely aligned.

Explore the SWS fair ratio for Telecom Italia

Result: Price-to-earnings of 56.5x (OVERVALUED)

However, Telecom Italia still faces risks such as its wider net loss and a P/E far above peer levels, which could pressure sentiment if profitability disappoints.

Find out about the key risks to this Telecom Italia narrative.

Telecom Italia valuation, one method does not tell the whole story

Telecom Italia trades on a 56.5x P/E, which is expensive compared with the European telecom industry at 17.6x, the peer average at 19.7x and the fair ratio of 25.1x that the market could move towards. That gap points to real pricing risk if sentiment cools.

See what the numbers say about this price — find out in our valuation breakdown.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Telecom Italia for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 245 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With Telecom Italia showing both an apparent DCF discount and a rich P/E premium, the picture is mixed and time sensitive. Take a closer look at the full balance of potential upsides and concerns through 3 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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