Telstra like Commonwealth Bank is a benchmark company for many mum-and-dad style investors, and it’s easy to see why! This article will answer the question: Should I Buy Telstra Shares (ASX.TLS) In 2021? How much are Telstra shares worth?
“When you buy Telstra shares, you’re buying the best mobile phone network in the country. And you’re buying a really nice inflation-protection bond from the government.”Pengana Investment Webinar
Current Shares Price ASX & Cap
The share price of Telstra is up 10% this year, however over the last 5 years is down nearly 40%. This may not be one of the best performers of the last 5-years or even the last year, however it is worth keeping in mind the cyclical nature of the telecom industry.
To really get a feel for the cyclical nature of the telecom business we should look at the upgrade cycle’s of the network i.e 2G -> 3G -> 4G to which Telstra is now deep in the expenditure cycle of rolling out the 5G network to their customers.
We are confident Telstra’s share price can push higher in the future.
Should I Buy Telstra Shares: Dividends
Telstra (TLS.ASX), has delivered excellent returns for investors over the past decade, averaging 4.11% yearly returns (including dividends). The Share Price has been a roller coaster ride for shareholders, being up in the last 10-years as high as $6.50 and as low as $2.62. However, one thing that seems to remain constant is the dividend policy.
67% of Telstra earnings are paid out to investors as dividends. Prophet believes this is a reasonable and sustainable level for the company at the present time.
How Much are Telstra Shares Worth: Position in The ASX20 Shares
We like quality shares that are in the top 20 by market cap in the country for this we look at if they are included in the Top 20.
Telstra is ranked number 15 currently in the ASX20 list. You can see the diversification of shares in the ASX20 below:
To be clear, we don’t just like all shares in the top 20, however most of these have wide competitive moats and have well defined brands that have stood the test of time. This is the reason why Telstra can comfortably charge an addition 10-20% for their premium service and they make more %/GB than most other carriers.
Telstra Corporation Limited is an Australian telecommunications company that builds and operates telecommunications networks and markets voice, mobile, internet access, pay television and other products and services.
Should I Buy Telstra Shares: Investor Sentiment
After surveying 949 Investors about their current TLS sentiment: BUY-HOLD-SELL as well as their target price over the next 12-months here are the results;
The results from this survey show there is currently no particularly strong investor sentiment on the TLS share price. So how much are TLS shares worth? Let’s get into it.
Should I Buy Telstra Shares: Technical Analysis
In summary, the upside is likely to prevail to $3.64 as long as $3.33 is a support. The alternative scenario is that a downside breakout of $3.33 would call for $3.24 and $3.18.
Here’s a breakdown of the detailed Technical Factors;
|Relative Strength Index||50.32||Neutral|
|Commodity Channel Index||−27.56||Neutral|
|Average Directional Index||15.92||Neutral|
|Stochastic RSI Fast||10.88||Neutral|
|Williams Percent Range||−82.86||Neutral|
|Bull Bear Power||−0.02||Buy|
Should I Buy Telstra Shares: Future Prospects
From the presentation provided by Telstra at the 2021 Macquarie Investor Conference we are provided with the below information regarding forecast full year earnings guidance
We see that Telstra are forecasting earnings to grow at a high single digit growth into FY22 and a low 2-digit growth leading into FY23. This is roughly inline with the Price to earnings ratio of 13.
Telstra has also forecast a COVID related impact to the business which is forecast to affect the earnings between 2H20 and 2H21. This is likely one of the drivers for the high single digit growth as compared to pushing the double digits.
At the Macquaire Investor Conference the CEO also mentions the following, “For the last four years, every year, we have had to face the confronting challenge of the financial headwinds which arise from the transfer of a material part of our business to the NBN. This has meant that we have started each of the last four years with our EBITDA going backwards by up to $800 million.” Prophet see’s this as an opportunity and once this issue is resolved we see a much more profitable business.
NBN has been a major pain point for everyone involved from Government to the Business.
Should I Buy Telstra Shares: Prophet’s Take
Telstra has been a core business in our portfolio since the COVID19 crash. It has made us decent capital gains and dividends for the past 3 years. We will continue to hold TLS for the foreseeable future. We see TLS as an excellent business that will continue to lead the way in the Australian Telecom Industry. At it’s current valuation we see the company as reasonably fair priced.
The main attraction for us in TLS shares are the perceived stable dividend policy. We also see some upside from TLS recent restructuring of the business.
Please Remember all Articles Published on Prophet Invest are Opinion only
How to Buy TLS Shares:
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