BT Sales Improve But Stock Still Overvalued say Analysts

BT's main revenue driver remains the consumer division, where revenue jumped 11% year over year, but analysts say the telecoms stock remains slightly overheated

Allan C. Nichols, CFA 1 February, 2016 | 2:58PM
Facebook Twitter LinkedIn

BT Group (BT.A) reported improved fiscal third-quarter results, but the nine-month figures remain in line with our full-year projections. We expect to maintain our fair value estimate and our narrow moat rating. The firm's revenue increased 3% in the quarter, but was flat through nine months versus our full-year projection of a slight decline, excluding the acquisition of EE, which closed on January 29.

BT actually added fewer broadband customers than its arch rival Sky

The main revenue driver remains the firm's consumer division, where revenue jumped 11% year over year. This was driven by a 23% increase in broadband and TV revenue and a 5% improvement in calls and lines. We are pleased to see good growth here, but remain sceptical regarding the return on the costs for sports and other programming driving this growth. We also think that BT's discussion of its broadband growth, while presumably technically correct, is misleading. The firm reported that it added 130,000 retail broadband customers, "representing 71% of the DSL and fibre broadband market net additions."

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
BT Group PLC142.00 GBX-0.87Rating

About Author

Allan C. Nichols, CFA  is a senior stock analyst and international investing specialist with Morningstar.