Does Telstra represent good value after its fall?
Back in May, we noted that the Telstra (TLS) share price had fallen by more than 20 percent in the previous 12 months, and we asked whether good value might be on offer. At that time, we estimated the value of TLS shares to be in the region of $3.77 per share, and concluded that value was not compelling against a share price at the time of $4.42. Following its recent results announcement, TLS shares have fallen to a level close to our previous value estimate, and in a market where value generally is scarce, it makes sense to repeat the question: does TLS represent good value?
Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.
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Alexander
:
TLS seems better established than other providers, and communications will always be a large part of the economy
Danny
:
Does that valuation include any of the retained earnings going forward being invested at or near currant rates of ROE?
Tim Kelley
:
Hi Danny, we have estimated the rate at which the company can grow, and worked out from that the requirement for capital reinvestment based on historical rates of return, so in simple terms – yes. Given growth rates are low, capital requirements are fairly modest.
garry peck
:
Telstra’s share price 2008…… $4.40
2017…… $3.95
Really says it all,no share price growth over a decade,
basically held as a bond like share because of the dividend
now being deduced, really brings it back into the many to choose from basket.