Why the Telstra Corporation Ltd (ASX:TLS) share price just can’t take a trick


The Telstra Corporation Ltd (ASX:TLS) share price has fallen 1 cent or 0.32% to trade at $3.09, trading at close to a 52-week low.

Today’s move in the Telstra Corporation Ltd share price comes on another tough day for the Australian stock market, with the S&P/ASX 200 Index losing 15 points or 0.26% to trade at 5,814. The benchmark index is down around 4% so far in 2018.

The Telstra Corporation Ltd share price has now slumped around 27% lower over the past 12 months. Zooming out a little further, and the Telstra share price trades at levels last seen in 2011.

In February, Telstra posted revenue (excluding finance income) of $12,907 million and total income of $14,510 million for the six months ended December 31. This was an increase of 0.8% and 5.9%, respectively, on the prior corresponding period. Telstra declared an interim fully franked dividend of 11 cents per share. This was made up of a 7.5 cents per share ordinary dividend and a 3.5 cents per share special dividend.

The latest share price woes comes on the day Kogan.com Ltd (ASX:KGN) launched a low-cost NBN internet service, offering unlimited data for $58.90 per month. A similar offering from Telstra retails for $79 per month. Kogan hope their affordable, flexible and simple NBN offerings will shake up the broadband market.

With a market capitalisation of around $37 billion, Telstra Corporation Limited is the 8th largest company quoted on the ASX.

From a valuation perspective, the Telstra Corporation share price trades on a price to earnings (P/E) ratio of around 10 times earnings. For comparison, the TPG Telecom Ltd (ASX:TPM) share price trades on a P/E ratio of around 12.6 times earnings.

According to Commsec estimates, Telstra shares are expected to pay 22 cents of fully franked dividends in the year ahead. That would see Telstra shares trading on a forecast fully franked dividend yield of 7.1%, or almost 10% gross. 

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Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au