WEBULL
WebtradeDownload

1&1 (XTRA:1U1) Q2 Results Put Its Undervalued Narrative Back In Focus

Simply Wall St · 1d ago

Q2 results and steady 2026 guidance draw investor attention

1&1 (XTRA:1U1) caught investors’ attention after reporting second quarter 2026 results that showed higher sales but lower net income and earnings per share, alongside guidance for flat service revenue in 2026 versus 2025.

See our latest analysis for 1&1.

1&1’s recent earnings and flat 2026 service revenue guidance come after a mixed price pattern, with the share price up 6% over the past week but down 14.86% year to date, while the 3 year total shareholder return of 67.27% points to stronger longer run gains than the 1 year total shareholder return of 12.54%.

If you are weighing 1&1 against other opportunities in the sector, this could be a good moment to see what else telecom investors are watching through 110 top founder-led companies

After a sharp weekly rebound, but with weaker earnings and flat 2026 service revenue guidance, 1&1 now splits opinion. Has most of the easy upside already played out, or does the current valuation still leave meaningful room ahead?

Most Popular Narrative: 16.1% Undervalued

Against the last close of €21.20, the most followed narrative for 1&1 points to a higher fair value, built on its own network rollout and changing cost structure.

Completion of customer migration onto 1&1's own network and continued 5G buildout will substantially reduce dependence on costly national roaming agreements, driving material long-term improvements in gross margin and EBITDA as more traffic is shifted onto owned infrastructure.

Read the complete narrative.

Curious how that shift from roaming to owned infrastructure feeds into the valuation story for 1&1? The narrative leans heavily on future margin expansion and a tighter link between earnings power and capital invested. The key is how these moving parts translate into the discounted cash flow path that underpins the fair value estimate.

Result: Fair Value of €25.28 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to weigh execution setbacks on the OpenRAN rollout and intense price competition in Germany, which could pressure 1&1 margins and contract growth.

Find out about the key risks to this 1&1 narrative.

Another view on 1&1 valuation

The most followed 1&1 narrative leans on a discounted cash flow view that points to fair value around €25.28, which screens as undervalued versus the current €21.20 price. Yet the stock trades on a P/E of 30.8x, compared with a fair ratio of 21.2x and peer averages around 15x to 17x. That gap suggests investors are already paying a rich earnings multiple, even if long term cash flow assumptions look supportive. Which lens do you put more weight on when those signals pull in different directions?

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

XTRA:1U1 P/E Ratio as at Aug 2026
XTRA:1U1 P/E Ratio as at Aug 2026

Next Steps

With mixed signals across 1&1’s earnings, revenue guidance and valuation, it helps to check the details yourself and move quickly to shape your own view. You can see what the market is optimistic about by reviewing 2 key rewards

Looking for more investment ideas beyond 1&1?

If you want a broader perspective alongside 1&1, this is the moment to scan other ideas so you are not relying on a single stock story.

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.