Telstra Corporation Limited's (ASX:TLS) Intrinsic Value Is Potentially 28% Above Its Share Price
Today we will run through one way of estimating the intrinsic value of Telstra Corporation Limited ( ASX:TLS ) by...
Australian (ASX) Telecom Sector Analysis
UpdatedDec 07, 2021
DataAggregated Company Financials
Companies65
- 7D-2.7%
- 3M-0.01%
- 1Y19.4%
- YTD18.2%
Over the last 7 days, the Telecom industry has dropped 2.7%, driven by a pullback from TPG Telecom of 13%. Meanwhile, Tuas actually outperformed within the industry, gaining 13% in the last week. This takes the industry's 12 month performance to a gain of 21%.
Sector Valuation and Performance
Has the Australian Telecom Sector valuation changed over the past few years?
| Date | Market Cap | Revenue | Earnings | PE |
|---|---|---|---|---|
| Tue, 07 Dec 2021 | AU$125.8b | AU$38.3b | AU$3.7b | 29x |
| Thu, 04 Nov 2021 | AU$127.5b | AU$38.2b | AU$3.7b | 30.3x |
| Sat, 02 Oct 2021 | AU$123.9b | AU$38.3b | AU$3.7b | 27.7x |
| Mon, 30 Aug 2021 | AU$120.9b | AU$38.2b | AU$3.7b | 27.7x |
| Tue, 06 Jul 2021 | AU$119.5b | AU$38.2b | AU$3.7b | 25x |
| Fri, 09 Apr 2021 | AU$107.2b | AU$37.5b | AU$3.0b | 34.1x |
| Thu, 31 Dec 2020 | AU$102.6b | AU$36.5b | AU$2.5b | 22.2x |
| Sun, 04 Oct 2020 | AU$88.4b | AU$36.5b | AU$2.1b | 26.4x |
| Wed, 08 Jul 2020 | AU$93.6b | AU$36.1b | AU$1.7b | 27.7x |
| Tue, 31 Mar 2020 | AU$64.0b | AU$34.4b | AU$2.6b | 17.5x |
| Fri, 03 Jan 2020 | AU$80.8b | AU$35.7b | AU$2.8b | 24.2x |
| Mon, 07 Oct 2019 | AU$80.3b | AU$35.6b | AU$2.7b | 23.7x |
| Sun, 30 Jun 2019 | AU$81.8b | AU$35.4b | AU$2.6b | 21.4x |
| Wed, 03 Apr 2019 | AU$71.1b | AU$36.4b | AU$2.9b | 20.2x |
| Sat, 05 Jan 2019 | AU$65.0b | AU$36.5b | AU$3.6b | 20.2x |
PE Ratio
20.2x
Current Industry PE: Investors are relatively neutral on the industry at the moment, considering it's trading close to its 3-year average PE ratio of 24.4x. It appears they believe that earnings will grow in-line with historical growth rates.
Past Earnings Growth: Both revenue and earnings for companies in the Communication Services industry have remained mostly flat over the last three years. This means that sales and the cost of doing business have remained relatively consistent over this period and subsequently, so have profits.
Industry Trends
Which industries have driven the changes within the Australian Telecom sector?
| Wireless Telecom | 4.52% | |
| Interactive Media and Services | -1.30% | |
| Media | -2.22% | |
| Telecom Services and Carriers | -3.88% | |
| Entertainment | -4.11% | |
Industry PE: Investors are most optimistic about the Telecom Services and Carriers industry which is trading above its 3-year average PE ratio of 36.5x. This is likely because analysts are expecting annual earnings growth of 9.5%, which is higher than its past year's earnings decline of 2.7% per year. Meanwhile, investors are most pessimistic about the Wireless Telecom industry, which is trading below its 3-year average of 49.0x.
Forecasted Growth: Analysts are most optimistic on the Entertainment industry, expecting annual earnings growth of 56% over the next 5 years. This is better than it's past earnings growth rate of 33% per year. Meanwhile, the Telecom Services and Carriers industry is expected to see its earnings grow by 9.5% per year over the next few years.
Top Stock Gainers and Losers
Which companies have driven the market over the last 7 days?
| Company | 7D | 1Y | Valuation | |
|---|---|---|---|---|
| NEC Nine Entertainment Holdings | 3.1%+AU$153.3m | 19.4% | PE29.8x | |
| DHG Domain Holdings Australia | 3.3%+AU$99.7m | 18.0% | PE91.9x | |
| HTA Hutchison Telecommunications (Australia) | 4.5%+AU$67.9m | -20.7% | PE18.2x | |
| OML oOh!media | 6.1%+AU$59.9m | -3.1% | PS2.2x | |
| SWM Seven West Media | 6.0%+AU$55.7m | 148.0% | PE3.1x |
