TELUS CORP (T.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:T - CA87971M1032 - Common Stock
19.01 CAD
+0.2 (+1.06%)
We assign a fundamental rating of 3 out of 10 to T. T was compared to 30 industry peers in the Diversified Telecommunication Services industry. T has a bad profitability rating. Also its financial health evaluation is rather negative. T is valued expensive and it does not seem to be growing. T also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- T had positive earnings in the past year.
- In the past year T had a positive cash flow from operations.
- T had positive earnings in each of the past 5 years.
- In the past 5 years T always reported a positive cash flow from operatings.
1.2 Ratios
- T's Return On Assets of 2.00% is on the low side compared to the rest of the industry. T is outperformed by 80.00% of its industry peers.
- T has a worse Return On Equity (7.43%) than 83.33% of its industry peers.
- T has a Return On Invested Capital of 4.94%. This is amongst the best in the industry. T outperforms 86.67% of its industry peers.
- T had an Average Return On Invested Capital over the past 3 years of 5.16%. This is in line with the industry average of 5.00%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2% | ||
| ROE | 7.43% | ||
| ROIC | 4.94% |
ROA(3y)2.07%
ROA(5y)2.49%
ROE(3y)7.11%
ROE(5y)8.46%
ROIC(3y)5.16%
ROIC(5y)5.5%
1.3 Margins
- Looking at the Profit Margin, with a value of 5.77%, T is doing worse than 80.00% of the companies in the same industry.
- In the last couple of years the Profit Margin of T has declined.
- The Operating Margin of T (15.48%) is worse than 86.67% of its industry peers.
- In the last couple of years the Operating Margin of T has declined.
- T has a Gross Margin of 62.85%. This is amonst the worse of the industry: T underperforms 83.33% of its industry peers.
- T's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 15.48% | ||
| PM (TTM) | 5.77% | ||
| GM | 62.85% |
OM growth 3Y-6.27%
OM growth 5Y-5.58%
PM growth 3Y-20.54%
PM growth 5Y-16.25%
GM growth 3Y1.26%
GM growth 5Y1.39%
2. Health
2.1 Basic Checks
- The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so T is destroying value.
- The number of shares outstanding for T has been increased compared to 1 year ago.
- T has more shares outstanding than it did 5 years ago.
- The debt/assets ratio for T is higher compared to a year ago.
2.2 Solvency
- Based on the Altman-Z score of 0.90, we must say that T is in the distress zone and has some risk of bankruptcy.
- With an excellent Altman-Z score value of 0.90, T belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
- The Debt to FCF ratio of T is 30.52, which is on the high side as it means it would take T, 30.52 years of fcf income to pay off all of its debts.
- Looking at the Debt to FCF ratio, with a value of 30.52, T is doing worse than 83.33% of the companies in the same industry.
- T has a Debt/Equity ratio of 1.68. This is a high value indicating a heavy dependency on external financing.
- Looking at the Debt to Equity ratio, with a value of 1.68, T is doing worse than 76.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.68 | ||
| Debt/FCF | 30.52 | ||
| Altman-Z | 0.9 |
ROIC/WACC0.84
WACC5.86%
2.3 Liquidity
- T has a Current Ratio of 0.76. This is a bad value and indicates that T is not financially healthy enough and could expect problems in meeting its short term obligations.
- Looking at the Current ratio, with a value of 0.76, T belongs to the top of the industry, outperforming 86.67% of the companies in the same industry.
- T has a Quick Ratio of 0.76. This is a bad value and indicates that T is not financially healthy enough and could expect problems in meeting its short term obligations.
- Looking at the Quick ratio, with a value of 0.71, T belongs to the top of the industry, outperforming 93.33% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.76 | ||
| Quick Ratio | 0.71 |
3. Growth
3.1 Past
- T shows a slight negative growth in Earnings Per Share. In the last year, the EPS has decreased by -5.83%.
- T shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -6.24% yearly.
- T shows a small growth in Revenue. In the last year, the Revenue has grown by 2.42%.
- Measured over the past years, T shows a small growth in Revenue. The Revenue has been growing by 6.66% on average per year.
EPS 1Y (TTM)-5.83%
EPS 3Y-0.32%
EPS 5Y-6.24%
EPS Q2Q%-14.29%
Revenue 1Y (TTM)2.42%
Revenue growth 3Y6.15%
Revenue growth 5Y6.66%
Sales Q2Q%0.14%
3.2 Future
- Based on estimates for the next years, T will show a small growth in Earnings Per Share. The EPS will grow by 6.00% on average per year.
- The Revenue is expected to grow by 2.94% on average over the next years.
EPS Next Y-4.46%
EPS Next 2Y1.71%
EPS Next 3Y3.45%
EPS Next 5Y6%
Revenue Next Year0.39%
Revenue Next 2Y1.39%
Revenue Next 3Y2.56%
Revenue Next 5Y2.94%
3.3 Evolution
- The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- Based on the Price/Earnings ratio of 19.60, the valuation of T can be described as rather expensive.
- Based on the Price/Earnings ratio, T is valued more expensive than 83.33% of the companies in the same industry.
- T's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.21.
- The Price/Forward Earnings ratio is 17.67, which indicates a rather expensive current valuation of T.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of T indicates a rather expensive valuation: T more expensive than 83.33% of the companies listed in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 25.98. T is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.6 | ||
| Fwd PE | 17.67 |
4.2 Price Multiples
- 83.33% of the companies in the same industry are cheaper than T, based on the Enterprise Value to EBITDA ratio.
- 86.67% of the companies in the same industry are cheaper than T, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 30.08 | ||
| EV/EBITDA | 7.88 |
4.3 Compensation for Growth
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y1.71%
EPS Next 3Y3.45%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 8.85%, T is a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 5.16, T pays a better dividend. On top of this T pays more dividend than 100.00% of the companies listed in the same industry.
- T's Dividend Yield is rather good when compared to the S&P500 average which is at 1.81.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 8.85% |
5.2 History
- The dividend of T has a limited annual growth rate of 1.90%.
- T has been paying a dividend for at least 10 years, so it has a reliable track record.
- T has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)1.9%
Div Incr Years21
Div Non Decr Years22
5.3 Sustainability
- 135.96% of the earnings are spent on dividend by T. This is not a sustainable payout ratio.
- T's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP135.96%
EPS Next 2Y1.71%
EPS Next 3Y3.45%
TELUS CORP / T.CA FAQ
What is the fundamental rating for T stock?
ChartMill assigns a fundamental rating of 3 / 10 to T.CA.
What is the valuation status of TELUS CORP (T.CA) stock?
ChartMill assigns a valuation rating of 1 / 10 to TELUS CORP (T.CA). This can be considered as Overvalued.
Can you provide the profitability details for TELUS CORP?
TELUS CORP (T.CA) has a profitability rating of 3 / 10.
What is the earnings growth outlook for TELUS CORP?
The Earnings per Share (EPS) of TELUS CORP (T.CA) is expected to decline by -4.46% in the next year.
Is the dividend of TELUS CORP sustainable?
The dividend rating of TELUS CORP (T.CA) is 8 / 10 and the dividend payout ratio is 135.96%.