BT17 Oct 2024 18:18
A turnaround may be coming
In the lead FTSE 100 index, telecommunications giant BT (LSE: BT.A) is changing hands on a low rating. With the share price near 146p, the forward-looking price-to-earnings (P/E) ratio is just below 7.9 for the trading year to March 2026. That compares to the average rating for the FTSE 100 at about 13.6.
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However, BT does have risks, one of which is the mountain of debt on the balance sheet. Another is its patchy earnings record, suggesting an uncertain path ahead. On top of those things, BT operates in competitive markets.
Nevertheless, the company announced this year it had passed peak capital expenditure for its fibre broadband rollout programme. So perhaps more of the firm’s cash flow can be used for debt-reduction and shareholder dividends.
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Meanwhile, the anticipated dividend yield for next year is running at about 5.5%, which offers shareholders a decent level of income now. But if the company’s cash flow can drive dividend progression in the coming years, the rising payment may help push the share price higher too.