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With the notable drop on Friday, I double-checked before turning in last night if yet another consensus analysts forecast has been published, as suspected there might be, as last time they did sneak one in mere days before the big reveal. But nothing.

However, there is one this morning - only hours old as it's dated 1st May!

And as expected, it rhymes with the knee-jerk reaction of the closing SP on Friday.

https://www.btplc.com/Sharesandperformance/Financialreportingandnews/Latestconsensus/Modules/Archive/Q12020-21/bt-group-consensus-1-may-2020.pdf

The analysts consensus as of this morning is for yet a further downgrading not only for the full year results on the 7th, but on each and every succeeding year adjusting their prior forecasts further down.

They have Revenue and Net Profit down just slightly only for 2019/2020, but quite nasty drops for both 2020/21 and 2021/2022 in Revenue and Net Profit.

Despite '21/22 being downgraded yet again, nonetheless, that year's totals still represent figures notably higher than 2020/21, suggesting 2021/2022 is the year they forecast a floor in the declines. However gone is any year reclaiming £2bn in Net profit. They forecast all years (including the upcoming finals on the 7th) as all sub £2bn in Net Profit, with no sign of it rising above £2bn for the foreseeable.

Checked Friday's intraday's price action and BT's SP appears to retrace from the day's high reached at 9:30am - and commenced from that time and continuously dropped into close.
So maybe it was common knowledge amongst the nods and winks that another bearish forecast had just been released, although clearly, it was a bearish day overall on the markets anyway.

Not a good forecast update (their opinion - but the market takes note) but 2021/2022 is still holding as a potential floor by the consensus. Just need to see the 2022/23 forecast, due maybe by end of May onwards, to establish a continuation of that, or whether back to same old.

Thank you Heallywood for the generosity shown in your post.

It can be difficult arriving at a firm decision when reviewing financial metrics; so let me use this opportunity to illustrate that further, with a competitor comparison in the industry/ sector that BT inhabits.

- Vodafone!

BT scores well for liquidity in its balance sheet, so my post questioned the necessity of considering a rights issue anytime soon.

Not so with Vodafone -
Their liquidity metrics are shot through to an undesirable degree. All three that applied to BT, which showed BT in a favourable light, are 'undesirable' when measured against VOD. All three commence with an 0.8 or 0.9 rating when the red flag cut-off point is not to end up below a 1.0
The most important of them is 0.88 whereas BT's was a stonking 4.85!

But all is still not what it seems. If I can see that from VOD's balance sheet, then the market can too, and VOD has a plan to fill the liquidity breach and has pre-empted criticism by announcing it is to sell off some of the crown jewels by setting up a company to be known as Tower Co and do a sort of sale and lease back thing by floating Tower Co as a separate company, pocketing the cash and still rent access to them from the new owners. Sounds like a plan to me.
And yet even with that huge liquidity hole, VOD is STILL rated a higher, better, investment choice than comfortably liquid BT, in these difficult times.
VOD's P/E ratio is higher than BT's suggesting the market expects better growth in the future than BT.

VOD scores better than BT in Free Cash Flow, yet VOD's Net Debt is 3 times that of BT's! However leverage via gearing is virtually half BT's but still in the red flag zone at 101%.

So VOD is favoured more than BT. Yet BT has never presented any single year as a loss. VOD has plenty of years (recent too) where instead of a Net Profit they have come in with a Net Loss and this one is going to prove no different with VOD coming in this year (published a week or so after BT's) with estimations of a £2bn+ loss!
Whereas BT's net profit will be similar to that amount in the opposite direction - circa £2bn net profit!

Overall, deep value gives BT a greater desirability and a higher, safer score in actual metric numbers as the better choice, yet the market has chosen VOD as the better value by keeping VOD at a P/E ratio higher than the industry average and much higher than BT's!

If it wasn't for the Tower Co sale, I would agree with anyone who proposed a rights issue for VOD.
BT has comfortable liquidity currently. Let's see after the May 7th results if that remains the case.

Until that review I can't give any credence to those in either the media or elsewhere that a rights issue is either necessary or imminent. No one is proposing a rights issue for VOD but IMO if that Tower Co sale takes any longer, further debt will accrue as VOD has no Net Profit coming to show for itself.

- And yet BT gets is the media's choice for a Rig

Thanks, Bertram, Rooster & NigeCo; appreciated - and you're welcome.
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Incidentally, was double-checking the full year results date (Thursday 7th May) as I noticed I'd said 'in a fortnight' in the post below, but actually it's closer to 3 weeks, but that's not the point.
I was looking at the date for the new Q1 publication for this new financial year - and it's on July 31st. However, before then, there will have been several brokers house analyst Q1 forecast updates. Last year they issued the first Q1 forecast on the 31st May.

So once the full year's trading results are received on the 7th May, investors will only have to wait a couple of more weeks until 31st May for the first Q1 forecast. It's not that in itself I find interesting - what will be - is first sight of the additional year 2022/2023 that will be published - and here's why;
They have this year and next, forecast to be showing declining metrics. Which apart from Net Profit, has been the old story for 5 years now. The 2021/2022 year they are currently showing, is the only year they've ever shown both the top and bottom lines as increasing, but only fractionally, so unoteworthy. But the important point here is - for the first time in 5 years the analysts, as a group (20 of them) all agree that at long last there is a pivotal year in which declines cease.

Now the truly important point is this: does that mean it's an oddball year and its back to declines thereafter, or will the year after that, 2022/2023, continue the increases in the top and bottom line metrics?
In other words, is there roughly a period beginning to hove into view, in which the last 5 years of declines, ceases to be a continuing concern, as a new epoch for BT's trading results unfolds?

That's why I find that May 31st Q1 to be potentially more important than the full year results to be published on May 7th. What if the 2022/2023 forecast builds on the very first year of no more declines (2021/2022) and shows an even better, decent consensus uplift in forecasts?

What I'm suggesting and asking, is this - is that elusive floor beginning to take shape albeit 2 and 3 years away?

I find that exciting - if the forecasts turn out to have any validity. And there's no need to wait a couple of years to find out, the end of May, the Q1 will possibly contain sight of that additional year's forecast. I'm quite looking forward to that Q1 new year forecast on the 31st May for simply no other reason, than it will contain that brand new unseen year (2022/2023) and expectations are: will it show a proper, genuine increase in forecasts that will thus get the media's notice and the subsequent trickle-down effect into market sentiment?

(Concludes Part 2 of 2)

. . . So it clears the minimum, but only just. Not good enough to form a clear decision in my view, so on to yet more tests and an examination of the 'Current Ratio' This is the ratio of Total Current Assets divided by Total Current Liabilities for the same period. to assess liquidity and BT's comes out at 1.04

Again a clear over-the-minimum hurdle, of 1.0 - and neither of those two are below it, but again, only just.

So let's cut to the chase and go for the important one and do the Greek debt test. Greece couldn't manage to meet even it's regular debt repayments the other year, remember? - And made worldwide headlines. Never mind repay the debt, they no longer had enough liquidity to make the simple repayments required! Surely BT must be close to the brink of difficulty in meeting its obligations too, if talk of a R/Issue is being bandied about?

So for BT let's get to it, and look at the big one - the 'Interest Cover' metric for just such circumstances. This is a useful way of measuring a company's ability to meet its debt obligations. When the interest coverage ratio is smaller than 1, the company is not generating enough profit from its operations to meet its interest obligations.
The Company would then likely have to either use cash on hand to make up the difference or borrow funds. It is seen as a possible warning sign when interest coverage falls below -2.5 measurement metric.
BT's Interest Cover is currently showing as 4.85 !!!!! AND THAT SEALS IT! 3 TESTS = 3 PASSES!
So, on the contrary, BT's balance sheet liquidity has been measured overall and tested to destruction, and it can meet all debt obligations comfortably. YOU might lose sleepless nights over BT's large Net debt - But BT isn't, because they can pay all their debts due on those loans. Not surprising really as BT is a cash-generating machine if nothing else.
The Net Debt is large and needs monitoring (which I do) but it's manageable. Future higher interest rates might bring a a different scenario, but as long as interest rates remain low it ain't a problem. A right's issue? Why? Even the dividend is well covered by good housekeeping. We'll see in a fortnight whether divi payment is under political threat though.

- but a right's issue?

(Part 1 of 2)

Not that old chestnut; the pension deficit again! Only ever brought up by newbies or those unaware of the pension deficit plan to finally eradicate the deficit. Was hoping someone would set the record straight as leaving half-truths hanging in the air just compounds propaganda and/or misinformation until untruths get bandied about as truths.

"I’d estimate they’d need to raise £4-5 billion to help plug holes in the pension deficit..."

Errr ...£4-£5bn? That's inadequate for starters - £10bn has been budgeted by BT over this coming decade to eradicate the deficit never mind £4bn-£5bn!

It's already in motion, commencing this financial year. Anyone raising the pension deficit as a problem is reading old outdated reviews. A better case can be made to focus on the Net Debt concern - but that too is not a problem, only an issue.

Check the balance sheet liquidity and you will see it is just fine - all debts are comfortably repayable. The net debt does look horrendous at first glance as it's leveraged to a gearing of 190%! (50% is considered a "normal" working amount. 100% is generally regarded as a red flag. BT's at 190% definitely suggests any unexpected "bumps in the road" to the economy or the business model could have serious consequences).

However upon checking the balance sheet liquidity there isn't a problem. Seriously. Amazing but true as can be seen easily.

The possible reason why not a problem, is perhaps contained in Heallywood's post - low interest rates.

First, BT's Free Cash flow is admirable and (slightly) better than the entire industry median which is strange don't you think with high net debt? But it is - awash with FCashFlow!

How can Free Cash flow be better than average with that high Net Debt?

Let's check BT's liquidity to find out why. Most analysis reports will use one area of the balance sheet to examine liquidity in such circumstances, I am fortunate to have access to not one, but three different areas of balance sheet liquidity to get an overall average picture which gives the last word on the subject. One metric could be excellent the other two could be stinkers, so a less than ideal situation - if two analysts choose differeing metrics to make a biased point.

Here's what three balance sheet metrics reveal about BT's liquidity, which according those citing the need for a rights issue should turn out to be abysmal:

The 'Acid Test ratio' often known as the Quick Ratio measures the state of Total Current Assets minus Total Inventory divided by the Total Current Liabilities for the same period to give a handy quick ratio. A healthy quick ratio would be above one.

BT's does that and is currently 1.01

So it clears the minimum, but only just. Not good enough to form a clear decision in my view, so on to yet more tests and

Continues > > >

Up for a laugh? Okay Standby. This post is an attempt at offering some (unsolicited) guidance for SP expectations for tomorrow Tuesday. So regard this post as for fun only. If you think you know the direction of the SP tomorrow and by how much then fine. Stop right here. I don't know what the SP will do tomorrow as last Thursday was a record breaking volume day, with the SP doubling intraday from an open of 262.50 up past £5 before closing the day at 377.50
Just incredible for all in the same day! And makes things all but impossible to guesstimate what will occur on Tuesday.

For those of the view the SP will continue to the upside, then all reasonable and proven indicators are, that is on the cards, to do so. There are some almost unbelievable juicy targets that may be achieved tomorrow as they're calculated, based on that incredible Thursday's price action.

First off, £4 isn't even on the radar. First hurdle to overcome is just over £5 @ circa 511p.

If it's in a mood for more then there's nothing to stop it having a go at circa 645's. Don't laugh just yet.

I don't think the next resistance will be seen but it has come up on screen, so here goes: and it's £££'s way higher than the £6's - at just pennies over £9 !

Okay now that is stupid in one day. Right, now you can laugh. And I don't blame you. That's not forecasting £9 (nearly didn't post this because of that) as high flying hot stocks like this, break everything that worked beforehand. But it has come up as a resistance to overcome, so if the calcs show it up on screen as a possibility for Tuesday, who am I to say, nah it's broken, and just ignore it, because it 'doesn't look right'.

When I say all indications are still bullish for continuance to the upside, that's true, but there's one that looks as if it has been 'broken' by this high flyer as they always do in such circumstances. But what if instead of being broken it was instead squeaking, that profit takers may rule the roost tomorrow?

When the price action retraced from 520 back down to close @ 377 it's standard shorthand to say the bears drove the SP back down from the day's high because the bulls couldn't hold it at that high level. Was that an indication of profit takers wanting to lock in some gains? If so, then what to look out for?

Well the pivot point is in the mid 380's so whatever it closes at by end of day, the SP is best closing no lower than mid 380's. And if profit takers abound?

Then it's likely low 250's would stop the retrace.

And if it's just a plain ol' bad day? Then it's likely 125-ish would be all the retrace could muster before ceasing.

If any of them crop up on Tuesday (a big IF) then I offer them as deciders, for whichever side of the coin you believe will rule the day.

Those SP's are null and void by Tuesday close and can not be used for guidance thereafter. One day only. Day traders points of interest.

VanV @
" Velo, I appear to have touched a nerve in you. For the avoidance of any doubt on your part, I am happy to reiterate that (1)YOU HAVE NO CHANCE OF PUTTING ME UNDER ANY DURESS, either (2) PHYSICAL OR PSYCHOLOGICAL, and even less chance (3) OF UNDERMINING MY CONFIDENCE UIN MY INVESTMENT here no matter how hard to (4)TRY TO CREATE UNCERTAINTY. "
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Reiterate? What reiterate? Apart from your opening para pasted above, I find there is nothing of concern in the rest of your post, but I'm dismayed at the issues you display that compel you to place post after post, ramping up your displeasure and anger at a perceived "agenda" you accuse me of having.

I'm not going to converse with you again after this post, just to say I've highlighted in capitals the offensiveness in your opening para.

(1) Where do you get the idea my sole purpose is to put you under duress? Utter madness. I don't know you for starters.

(2) Seriously, are you suggesting I've posted of causing you physical or psychological discomfort in some way? What inner demons make you display such insecurities? Why mention "physical" at all? I do not threaten people - ever. A mystery why you should accuse me of that. I'm quite sure I haven't posted anything that could be misconstrued as putting your physical well being at risk. I've hardly spoken to you as I've only commenced posting on here 2 days ago.

(3) So you believe my "agenda" is the sole objective of undermining your "confidence"? Is that right? I'm not missing a satirical joke or something am I?

(4) Seriously, by point 4 I get it. To create 'uncertainty' my rrrss!

There's nothing wrong in saying you're invested here and want only to see positive posts praising your investment. I wouldn't think less of anyone who said that, and I would perhaps examine my own contributions to see if inadvertently some may be taking offence as you have.

----------------

I suspected something was up, when you admitted of the very first post of mine:

" I found some of the wording of your original post very odd; this coupled with you dangling the carrot of making FORECASTS and future contributions to this bb, did not sit comfortably with me. From the outset it appeared to me that you may have had an AGENDA; hence my tongue-in-cheek reply to you, claiming that I invested in NCYT because I liked the name and it afforded to me a good strapline of 'Champagne supernova'! I also found some of your questions to be a bit too incisive.
Whatever your AGENDA is, good luck! "

Never mentioned forecasts.
Incisive? A compliment! Was that a genuine typo and you meant my questions were too 'Invasive'?
'Agenda' comes up repeatedly. You don't allow my posts as contributions - they're an agenda in your book.
----------------

So, you believe I have an agenda.
Say it: I wear a white suit and sport a black eye-patch, whilst stroking a white cat on my lap.

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