United Internet UTDI.DE
What does United Internet do?
United Internet is a German internet and telecommunications group headquartered in Montabaur. The group bundles its activities in a holding structure whose subsidiaries serve private and business customers with internet access, mobile services and digital applications. Well-known brands include 1&1, IONOS, GMX and WEB.DE.
The business is divided into the areas Consumer Access and Business Access as well as Consumer Applications and Business Applications. Revenue comes predominantly from recurring contract fees for DSL, fiber and mobile connections, from hosting, domains, cloud services and web presences for small and medium-sized businesses, and from email services that are partly ad-financed and partly paid. In access, the group competes with large network operators such as Telekom, Vodafone and Telefónica; in hosting and cloud, with international providers. One strength is the large number of contractually bound customers and direct marketing through its own brands. At the same time, in the access business the company depends on wholesale services from other network operators.
Score profile
Rank vs. Telecom Services (17 companies). 10 = top of the group, 5 = middle. Calculated from the metrics below, without AI.
Metrics compared with the industry
On profitability and quality, United Internet ranks below average in the group Telecom Services (3.2/10). On growth, the company ranks above average in the group Telecom Services (6.8/10). On valuation (higher = cheaper), the stock ranks below average in the group Telecom Services (3.9/10). On financial strength, United Internet ranks below average in the group Telecom Services (3.1/10).
| Metric | Stock | Group median | Ranking |
|---|---|---|---|
| Forward P/E | 12.5x | 8.7x | better than 19 % |
| Trailing P/E | 15.0x | 11.8x | better than 21 % |
| PEG ratio | 1.6x | 1.6x | better than 50 % |
| EV/EBITDA | 9.1x | 7.7x | better than 26 % |
| Price/sales | 0.7x | 1.0x | better than 62 % |
| Price/book | 0.9x | 1.4x | better than 82 % |
| Revenue growth | 3.7% | 3.7% | better than 50 % |
| Earnings growth | 35.7% | 0.0% | better than 85 % |
| Gross margin | 31.1% | 56.9% | better than 9 % |
| Operating margin | 11.4% | 12.9% | better than 44 % |
| Net margin | 5.0% | 8.8% | better than 38 % |
| Return on equity | 8.1% | 11.6% | better than 38 % |
| Debt/equity | 91.3% | 91.3% | better than 50 % |
| Current ratio | 0.7x | 0.9x | better than 21 % |
| Free cash flow yield | -3.3% | 8.3% | better than 23 % |
| Dividend yield | 2.0% | 3.9% | – |
| Payout ratio | 28.6% | 46.2% | – |
| Beta | 0.54 | 0.62 | – |
Valuation: what is United Internet worth?
Two valuation approaches – a discounted cash flow model and a valuation at the industry’s median multiples – give United Internet a model range of 16.22 EUR to 17.13 EUR per share.
10 analysts, average rating “Buy”, average price target 32.26 EUR (+31.4%).
The full DCF matrix, the reverse DCF (what growth the price implies) and scenarios are part of the Pro analysis.
What the business depends on
- The number of contract customers and their average revenue per customer largely determine recurring revenue.
- Demand from small and medium-sized businesses for hosting, cloud and domains structurally supports the applications business.
- Efficient customer acquisition, low churn rates and cost control on network wholesale services shape profitability.
Risks
- Intense price and competitive pressure in the German mobile and broadband market can weigh on margins and customer growth.
- High investment and dependence on network access and wholesale providers create cost and regulatory risks in the access business.
- The complex group structure with equity holdings and financing obligations makes earnings vulnerable to interest rate and valuation effects.
What to look for with United Internet
Operating earnings before depreciation and amortization (EBITDA) relative to revenue is informative because it shows the earnings power of the contract-based, capital-intensive business.