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Bloody L, Mikey, You've done some digging there - right into ther heart of the beast and into the European Commission's own website press release site. Well done.

Did you see Nigel Farage on the chat sites there? I put his name in the search box but it might as well have said we don't use that sort of foul language on here and instead linked me to "Prime minister Tony Blair" and Peter Mandelson LOL !

JS23 - I'm assuming you're not looking at the recent history of the price action and concentrating on the fundamentals, and thus pondering why this little SP retrace?

Overall, longer term, the price action history is of a very nice rising uptrend indeed, and for the recent past couple of years particularily since late 2016 - to date.

Apart from a retrace from Oct '18 the SP reasserted itself from late Dec '18 and continued until mid Jan '19 where for a v short while, it retraced quite noticeably and didn't revert back to recommence the longer term uptrend until virtually March 1st this year.

Despite your misgivings, it's been in an uptrend ever since. Yes a good, strong trading update, showing that all is on course to achieve year end forecasts.

And that's the point I'm highlighting. Since March, the SP has risen not in a straight ruler line but by a series of very noticeable peaks and troughs. Like a triple humped Loch Ness monster :)

There's been three peaks with this current descent into a trough being the third fallback into a trough - from which, if history repeats itself, it might set off on the next bull run to the next peak.

- I estimate, maybe/maybe not, it might retrace to 110/112 ? AND from approximately that vicinity set off on the next uptrend.

In other words - this is the third trough from three peaks and two troughs in an overall rising up trend - as shown by higher highs and higher lows - that commenced at the neginning of March, so it all looks good to me.

On fundamentals the next two years show a forecast increase of both revenue and net profit to a staggering level when compared to years past; really looking good. Some metrics look a bit unkind, but overall a nice little up trending stock. Best of all - I like that this stock is that rarest of rare beasts - a stock with no debt at all, but instead a surplus! What's not to like?

So unless patterns disintegrate once everybody becomes aware of them, I'm of the opinion the SP will continue to retrace until perhaps the 110/112 area and thereafter revert to the longer uptrend to even higher than the last peak - which was near 130 wasn't it?

Of course, then again, this 120 area is a natural support and it might not dip lower at all; but recommence up trending from here; no one can say for sure. But what I am sure of is, that the SP is still on track with a longer term uptrend and perhaps a couple of troughs thrown in along the journey.

By the way, not yet really interested in EQLS but received an ad hoc copy of a tip sheet I subscribed to some years ago and I noticed EQLS as a recommendation chosen by the tip sheet back on 1st March. So just checking it, out of curiosity. I like what I see so far (with a few reservations of no consequence).

Hmm... SP-wise that tip sheet called this one right to date, haven't they?

Aug 2nd maybe next chance of a reappraisal by the market?

Time only for one post (make that two, in a day or so on net profit forecasts) so:

Thanks for that link Poundashare. Just the kind of thing I’ve been on the lookout for – BT's Free Cash Flow disappearance.

I’m now 99% happy with what I’ve stumbled across, mainly upon finally checking with BT’s website which answered my question as to why so many analysts revised their opinion by offering that this year’s net profit will be down and by implication less than last year’s. It won’t (or rather it’s highly unlikely to be less) only 2 or 3% less than initial projections - but that still leaves net profit higher than last year! This should be confirmed as the case on August 2nd when the Q1 first quarter trading results are announced.

That analyst link concludes that the dividend is likely to be cut, others that BT is a poor risk and early on, that the SP is now only worth £1. Scary stuff.

1st) I feel certain for sure that the full year’s net profit will still be greater than last year’s (figures in next post) despite a reduction in forecasts (hopefully revealed on Aug 2nd Q1 results and new subsequent forecasts are then revealed). So that fears of a net profit crash are put to bed – despite as intimated when speed reading the recent flurry of updated analyst reports that impacted the market – And Aug 2nd will confirm.

2nd) The destruction of the truly excellent Free Cash Flow metric for BT that occurred overnight on those reports - are revealed on BT’s own website here:
https://www.btplc.com/Sharesandperformance/Financialreportingandnews/Latestconsensus/index.htm
The reason? The 10 year pension deficit plan kicks in.

Then scroll down to the latest consensus and click Q1 2019/20
Then seek out the 28 June 2019 PDF which should open on to a black background page. (That will be my next post; check it out beforehand).

Basically, Gavpants 10 year pension deficit payment inputs kicks in next year and runs at £900m per year to a total of £9B and thus, finally seals the pension crisis for good. But right now, it has destroyed the FCF metric.

Unfortunately, nothing has been arranged since Gavpants left, so as the FCF is a forward looking metric that means 2020 projections now kicks in – and hey presto the excellent FCF gets kicked into touch. So that means something’s gotta give to correct the situation. The dividend IS WELL COVERED (fact!) and not uncovered as some analysts report as they were looking at FCF coverage only. Something/s have got to be cut or debt increased yet further or the 10 year pension deficit reduction plan won’t happen. So look on the bright side. Maybe there will be a chunk bitten out of the dividend – but what do investors get in return? Only the pension deficit consigned to the pages of history! And when that occurs and assuming a ‘reasonable’ 5G funding and transition, then the very thing that (initially) started BT’s SP slide in 2016 will be no mor

Snowed under with workloads. My last post for some time - anywhere. Haven't got long, so just wanted to record some final, personal observations.

Today's price action, does all-in-all "appear" to signify maybe the commencement of a rally proper, away from recent lows. However that doesn't mean a shoot straight back up to yesteryear's high £30's (IMO).
I have a more sanguine outlook for the immediate future as seen this countless times on IMB for the last 3 years. Those recently acquiring this share will be rightly more buoyant, than I.

I topped-up this morning @ 1831.odd but nearly didn't. I had 1830's as a really strong last ditch area that if it held, would signal perhaps the worst was over. It's the last Fibonacci 61.8% retracement level (the strongest) when readings taken from the depths of 2009 to recent highs in 2016. One of the best = 'The Golden Ratio' (Google if unfamiliar).

However, was late logging in and straight in to 1820's. I froze with horror. Clearly I had misjudged entirely. I held the view that once 1830's broke there might be supports at 1700 and not much between there and the stronger 1500's IMO (originally mistyped in an older post as 1300's). So decided on a smaller top-up which left room for further buys below 1820's if that was the direction now. Delayed too long as on my broker's page was offered 1831 to buy. So I took it.

Here's the thing. Has that 1830's really triggered? That was intraday - not a close. In effect the past 3 days closed as:

Monday = 1852
Tuesday = 1865
& tonight Wed = 1882

So, anyone who bought or topped-up in early June have still bought in at the bottom and shouldn't focus on missing this morning's 1820's. That was intraday - less power than closure prices. Also this second revisit to early June's low 1860's still holds (aka: visit an old support once too often and it will give way) as Monday's overshoot bounced back in 24 hours flat and did not continue further below.

So the good news is, that should this rally peter out, then there's still a close in the 1830's to at least protect and have a pop at stopping the rot. But that's pre-supposing the SP is destined to travel back down to today's earlier lows.

On balance, looking at mid and longer term trends, I'm pretty certain the SP will falter and return lower at some point in the near future. Closing on 1830's 'could' be the occasion that is the true floor for a longer term recovery - but if not, a close below 1830's will signal the more dangerous longer term 3 year down trend is reasserting itself to god knows where for the SP.

So, my strategy is: Going to attempt selling this recent top-up (as seriously overweight now) at what I think will be a turning point up in the £20's, and buy back lower, then rinse and repeat lowering my cost price each time. Chances of success with that? Low to zero. But doing nothing whilst I'm under water up there in the £30's is no longer an option.

All IMO only

Up to my eyes in a backlog of personal stuff, and it's getting worse, so will be difficult to post anywhere until at least August. So just wanted to follow on from my last post on perhaps a more positive note (depending on your outlook).

And it's this: I've gone back 5 years or so (see below) to add to the assertion that a characteristic of VOD's reputation is that the market has traditionally bestowed/awarded a premium rating on VOD by allowing it a higher PE ratio rating that was head and shoulders above all its industry rivals. However, last year's results declaring a loss rather than a profit is a weight the market won't ignore. It was touted by the CEO as a one-off and checking THIS year's current earnings forecast the market expects VOD to return to profit and show estimated earnings of £2.298b (So gone is last years £8b loss). And next year is showing an estimated increase to £2.654b in earnings.

Question: When the interims come out in November, will that be the turning point for the market to allow VOD to begin regaining its premium rating?
It's why currently, the PE ratio is only a smidgen below the average. Any other company making such a loss would have been punished far, far, more severely. So far the market has driven VOD's SP to only just below industry averages (Cynics might argue maybe, this is only a first step in driving it down to similar lowly PE ratio levels such as BT sits at).

So a quick look at the past 5 years or so of PE ratios, then compare to today's, and see if it's possible with decent earnings revealed in the interims in November, if regaining that premium rating is at all possible. Consider:

June 2014 PE ratio = 31.4 !!!
June 2015 PE ratio = 44.4 !!!!!
June 2016 PE ratio = 38.2 !!!!
June 2017 PE ratio = 30.1 !!
June 2018 PE ratio = 19.2 !
June 2019 PE ratio = 15.5 x (This mornings intraday ie., below industry average)

First thing is that from, 2014 through to 2017 the market allowed VOD to be valued well above the industry average as a star player at virtually double the PE average of its competitors.

The average PE ratio enjoyed by VOD from 2014 to last year is a staggering, absolutely staggering PE32.6
(Cynics might say , see overvalued all along; but ask the market why it had faith in awarding VOD a premium rating)

If this mornings up to date PE is included, then the last 6 years average is still just under, almost double the industry average at = PE29.8 and certainly more than double the general wider stock market average as a whole. Impressive.

So, has all that gone for good? Is it the end, for ever, of premium ratings for VOD's stock? The interims in November will almost certainly contain early pointers to answering that future direction.

PS. There are countless ways to evaluate that premium rating; I just happen to favour the PE ratio method as it's easy and simple for me to get my head around. And It serves me well.

- Now I really do have to crack on elsewhere.

Shouldn't really post this as it's a bit depressive. Was searching through posts of mine a month or two back when trying to find a post in which I replied to Last Call in Oct/Nov last year (to compare phrases he used recently). It was him, but in the process I turned up an old post of mine with a 124p forecast as a potential fair value price when using the price earnings model to compare to the industry average. Was reminded of this a few weeks ago when the whole weekend 124 was staring back from the VOD page. So as it's back to that old 'fair price' tonight, I had another recalculation tonight as recently I'd noticed for the first time in many a year VOD's PE ratio is keeping BELOW it's industry average - in other words - undervalued.

The Industry average that both VOD and BT are in, is a forward P/E ratio average of 16.3

Now BT is seriously undervalued - a deep value stock, with it's forward P/E ratio standing at only 7.9
So straight away without any calculation you can see that BT would need to more than double it's SP to be just plain average to the industry average. More than Double!

So what is VOD's? It too, is less than the industry average, so that old 124p is now too low. As of tonight the forward P/E ratio for VOD stands at P/E15.8 just a smidgen below the industry average, and that means using a fair price P/E valuation method, 128p is now the 'fair price'.

Thing is, VOD has always commanded a superior rating to the industry, never average and always above - it had been until the beginning of last year: well, well above the industry average. In Jan 2018 it stood at PE 26 well above the average! ( So that's why it hasn't fallen as deeply as BT's has. So the question is, how much higher can the PE be pushed before the SP makes it look 'too high'?)

If unhappy with that PE valuation model, then on standard settings using not only the PE method but combining it with a host of other convoluted metrics to arrive at what's called a Relative to Sector model then fair price comes out on the computer at 186p

I prefer the PE method as you can't mess with the inputs so anything below 128p is in my book, is undervaluing VOD. So it's no surprise the SP has been accepting of this area 120's to 130's for some time now since the results last month.

Whatever, using some alternatives (and some others are even worse!) the Enterprise Value method suggests better, with conversion fair price of 214p

On the other hand over at freebie site Simply Wall Street they have the Future Cash flow method giving off a fair price of: 326p !

That's the only good thing I can say - pushing the SP below 128 is straining a share that historically has never experienced life in the council estate of low PE ratios.

Is VOD's PE worth higher, pro rata, than all it's competitors? If yes, then a higher than the industry average PE ratio is feasible; and with it automatically comes a higher SP. But that is the question, because right now it's only a smid

Fleccy, Fleccy, can't believe you're deliberately missing the point of the importance of Analyst/Brokers revenue & earnings forecasts. Think macro not local P/Investor level.
In my post, I'm making assumptions that all are on the same page
- after all, we're active investors.

I think you're just angry at the visible effect of witnessing what sheer bearish sentiment can have on a share price in which you have a position.

And I did open my post with a catch-all "... analysts and brokers houses change ..."
- Apologies if you overlooked the brokerage houses bit as I did precede it with the word "analysts".

Anyone who relies on fundamentals and ignores brokers analysts forecasts at trading update times, will suffer.

For instance look at the net profit (earnings) for BT over the past 3 years. Here they are - go check. These are historic:

Net Profit to March 2017 = £1,908m

Net Profit to March 2018 = £2,032m

Net Profit to March 2019 = £2,159m

Clearly, net profit went up, up, up, every year, y-o-y what's not to like?
So why did the SP then FALL, down, down, down, Y-O-Y over all 3 years???

The brokers (the market forecasters) clearly had issues, pension/net debt/ revenue/ and just failing to meet earnings forecasts by a smidgen/ whatever the brokers set, BT did not dance to their tune.

I have the net profit for BT going up this current year. What if it still falls BELOW the Brokers 'new' downgraded forecast? As it always does - the SP would more than likely go down.

Similarly, if a reduction in net profit is recorded, but surprise surprise, it's far less than the brokers notes feared - the SP goes up - despite actual net profit being lower than the previous year.

If you still don't get it, here it is in black and white:

BT does not set the forecasts - the brokers analysts do, BASED on info/ meetings with BT. That's why you hear the common refrain in the news/media "came under market estimates/ came in better than expected forecasts" They're the brokers forecasts - not BT's.

UInderstand this - brokers forecasts rule - not a company showing increases - it has to be the increase set by "the market" - the brokers estimates.

So analysts notes from the brokerage houses are deadly important - if (IF) they form a general consensus. (PS. If not and it turns out to be just a handful of media analysts then it will be just temporary bearish sentiment IMO).

*!*!* It's not about PI's buying and selling on each analyst announcement as you suggest. It's all about the company meeting the brokerage houses consensus, ie., the market. It's vitally important. *!*!*

The only way to beat the broker's analysts downgrades is for competing (several) funds or whatever, to buy large on their own accord.

P.P.S. Not to be confused with the brokers forecast of the SP - which are often as not, laughably-split-your-sides-laughing, wide of the mark forecasts (maybe using Discounted Cash Flow to make their SP estimates perhaps?)

Concludes.....

------------------
You conclude with:
"I tried to find something in the annual report but couldn't but did find this in an overall positive statement from Credit Suisse;

'Last month, BT reported a 2% drop in adjusted underlying earnings (EBITDA) to £7.39bn and a 1% decrease in adjusted revenue to £23.46bn for the year to March 31, as growth in the consumer business was offset by regulated price reductions in Openreach and declines in the enterprise businesses.

For the 2020 financial year, BT expects adjusted EBITDA will fall to £7.2bn-£7.3bn as adjusted revenue falls by another 2%.'

Ascoyne - yes that report advises to be overweight in BT - in early June, just a week or two ago. And here we are just 2 or 3 weeks later with DIFFERING OPINIONS BY DIFFERING ANALSTS TO "SELL" 'only a £1' and general downgrades Hold-only etc.. etc.,

But the reason I highlight your text there, is that's the historic results for the year just ended and doesn't help in the debate over the current "forecasts" for this year and next.

- I've read one report that highlights (just weeks ago!) on increasing net debt (correct). And bewails the pension deficit because it's "£5b" - INCORRECT (it's higher :) :) !

It was £7.283B at close of the last year end. And while yes, that's an increase on the preceding year, compare and contrast that to the close of 2017 where the pension deficit was £9.192B !

So the decreasing EBITDA it states was for the year just ended. It does offer that EBITDA as going forward to be down (forecast and that's why you posted it of course) so thanks, but BT's forecast EBIDTA is still superior to the industry average and superior to the entire stock market average forecasts by a huge margin and is currently ranked 16th best in EBITDA out of 96 in it's industry.

I hate EBITDA though. So does the best of the best - Warren Buffett - and his mate Charlie Munger who can't get past two words out about EBITDA without his language being deleted in articles :) :) They're legendary for getting up and walking out on presentations to them that use EBITDA to inform and persuade opinion. EBITDA is snake oil salesman speak IMO - and to the 2 best investors in the world :)

Whatever, sentiment rules and these bearish analyst updates the past few weeks or so, are winning the day and affecting the SP. Sentiment changes though. I'm hoping when the time comes the true forecast facts don't.

PS. Forecast metrics for BT still clearly show BT as a deep value share. The downside is that could take many a year to be appreciated by the market. One worrying thing which I will look at deeper when more time is Free Cash Flow.

It has suddenly taken a turn for the worse since the last results were published. Can't argue with that. That's where I could be plain wrong and not realise so. Needs investigating further - Free Cash Flow.

Watch out long post ahead.

Thanks Ascoyne for your attempt to help me in this 'nightmare' of forecast fundamentals - and I do need help before coming anywhere near to agreeing with these damaging latest reports (Is it any wonder investors look for other/additional methods? TA?? :) :) that are wholly at odds with the matter in hand. And I do genuinely thank you. Thanks for taking the time to help me in no-man's land.

However your misunderstanding may be entirely mine for my unwieldy long posts.

Re-read my late night post as wondered how you've shot off down the wrong path based on the content of my post, but am grateful to Aus's commendably succinct post (I'll have to try that sometime :) that gets what I'm saying bang on. He might disagree with my post (don't know) but he's correctly identified what I was wailing on about. But I sincerely thank you for trying to offer help. Here's where you shoot of in another direction -

------------------
" I'm by no means a financial expert and we're probably talking about different terms and ..."

Same here Ascoyne, that's why I lay out good money each year to subscribe to a data service free of opinion and just gives the actual data, to help me then form my own opinion, and even then I still need TA in conjunction with it. And yes you are talking about different terms :)

------------------
"...but essentially I think you're arguing the difference between gross and net. If the profit is only increasing as a result of cost cutting then revenue is not necessarily increasing is it?"

No, I'm not. See the last para of my post where I sum up again: 'Revenue is forecast to be down BUT earnings are forecast to be UP'.

I don't state anywhere that revenue is forecast to be going up, neither of course do the analysts. I'm saying earnings aka net profit, is forecast to be going up this current year and next. The analysts claim the opposite. Somewhere in that post I offered a potential reason for the strange anomaly of revenue falling y-o-y, but yet with net profit doing the opposite by going up, by offering cost cutting with a question mark as potentially the explanation why. What you've done is take that and apply it to revenue. Not what I said in the post.

------------------
You conclude with:
"I tried to find something in the annual report but couldn't but did find this in an overall positive statement from Credit Suisse;

'Last month, BT reported a 2% drop in adjusted underlying earnings (EBITDA) to £7.39bn and a 1% decrease in adjusted revenue to £23.46bn for the year to March 31, as growth in the consumer business was offset by regulated price reductions in Openreach and declines in the enterprise businesses.

Continues.......

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