TELUS (TSX:T): Valuation Insights Following WestJet Partnership and New Growth Targets

TELUS (TSX:T) is making headlines after unveiling an expanded partnership with WestJet, linking their loyalty programs for broader rewards and customer engagement. At the same time, TELUS outlined new cost-saving plans and long-term growth targets.

See our latest analysis for TELUS.

TELUS shares have picked up momentum this year, with a 9.4% share price return year-to-date and a recent boost likely driven by buzz around its enhanced WestJet collaboration and bold cost-saving goals. Despite some turbulence in the past three years, the one-year total shareholder return is back in positive territory at 2.4%, suggesting that confidence could be rebuilding as TELUS executes on its growth strategies.

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Given its recent surge and new targets for growth, is TELUS offering investors a bargain relative to its future earnings power, or are markets already factoring in all the good news?

Most Popular Narrative: 8.1% Undervalued

With TELUS closing at CA$21.48, the most watched narrative points to a fair value around CA$23.38. This suggests market optimism still trails these future-focused assumptions. There is a focus on the company’s strategic expansion and on sources of growth beyond traditional telecom, setting the context for a compelling perspective below.

Persistent growth in broadband adoption, driven by increasing demand for high-speed connectivity (due to remote work, IoT, smart home solutions, and data-heavy applications), continues to underpin strong customer additions and supports higher recurring revenues. Particularly as TELUS leverages its expanding PureFibre and 5G roll-out to deliver differentiated bundled offerings, this is expected to boost service revenues and ARPU over time.

Read the complete narrative.

The growth story behind this narrative is built on ambitious revenue shifts and margin expansion, promising long-term rewards. Want to see the detailed financial leap and technology bets shaping this outlook? The answer lies in their future growth assumptions and the market’s appetite for premium valuations. Click through to uncover the numbers and logic powering this valuation.

Result: Fair Value of $23.38 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering regulatory pressure or a slowdown in subscriber growth could quickly challenge these upbeat forecasts and reduce TELUS’s long-term earnings outlook.

Find out about the key risks to this TELUS narrative.

Another View: What Do the Multiples Say?

While the market narrative sees TELUS as undervalued, a closer look at its price-to-earnings ratio raises a red flag. TELUS trades at 34.1x earnings, which is far above both global telecom peers at 16.8x and the fair ratio of 17.8x. This valuation premium could signal risk if market expectations stumble. Which yardstick gives the clearer picture?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own TELUS Narrative

If you want to test the numbers yourself or think your analysis would differ, you can build your own view of TELUS in just a few minutes, Do it your way

A great starting point for your TELUS research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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