Telkom SA SOC (JSE:TKG) - Share price, News & Analysis

TKG fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	1/6
Past Performance	4/6
Financial Health	4/6
Dividends	0/6

TKG Overview

Rewards

Trading at 45% below our estimate of its fair value

Earnings are forecast to grow 11.79% per year

Earnings grew by 352.7% over the past year

Risk Analysis

No risks detected for TKG from our risk checks.

Telkom SA SOC Competitors

MTN Group

JSE:MTN

R252.2b

Vodacom Group

JSE:VOD

R235.3b

Price History & Performance

Summary of all time highs, changes and price drops for Telkom SA SOC
Historical stock prices
Current Share Price	R47.50
52 Week High	R24.85
52 Week Low	R50.22
Beta	0.65
1 Month Change	25.10%
3 Month Change	8.87%
1 Year Change	73.93%
3 Year Change	-6.99%
5 Year Change	-17.65%
Change since IPO	68.44%

Recent News & Updates

Aug 16

Telkom SA SOC (JSE:TKG) Has A Somewhat Strained Balance Sheet

David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...

Jul 29

Here's What To Make Of Telkom SA SOC's (JSE:TKG) Decelerating Rates Of Return

If we want to find a stock that could multiply over the long term, what are the underlying trends we should look for...

Shareholder Returns

	TKG	ZA Telecom	ZA Market
7D	3.4%	1.6%	1.6%
1Y	73.9%	10.0%	21.3%

Return vs Industry: TKG exceeded the ZA Telecom industry which returned 10.1% over the past year.

Return vs Market: TKG exceeded the ZA Market which returned 21.3% over the past year.

Price Volatility

Is TKG's price volatile compared to industry and market?
TKG volatility
TKG Beta	0.65
Industry Beta	0.45
Market Beta	1

Stable Share Price: TKG is not significantly more volatile than the rest of ZA stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: TKG's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1991	12,039	Sipho Maseko	https://www.telkom.co.za

Telkom SA SOC Limited provides integrated communications and information technology (IT) services to residential, business, government, wholesale, and corporate customers in South Africa and internationally. The company offers mobile and fixed-line telecommunication services, including broadband, optical and carrier, broadband data, voice, content, and gaming solutions; small and medium entity information, communication, and technology services. It also provides cloud computing, unified communications and collaboration, security, big data analytics, and mobility solutions; enterprise and applications solutions, and IT managed services and infrastructure; digital and social media advertising; and e-commerce services.

Telkom SA SOC Fundamentals Summary

How do Telkom SA SOC's earnings and revenue compare to its market cap?
TKG fundamental statistics
Market Cap	R23.52b
Earnings (TTM)	R2.42b
Revenue (TTM)	R43.56b

9.7x

P/E Ratio

0.5x

P/S Ratio

Is TKG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
TKG income statement (TTM)
Revenue	R43.56b
Cost of Revenue	R24.99b
Gross Profit	R18.57b
Expenses	R16.15b
Earnings	R2.42b

Last Reported Earnings

Mar 31, 2021

Next Earnings Date

n/a

Earnings per share (EPS)	4.89
Gross Margin	42.63%
Net Profit Margin	5.56%
Debt/Equity Ratio	36.3%

How did TKG perform over the long term?

See historical performance and comparison

Valuation

Is Telkom SA SOC undervalued compared to its fair value and its price relative to the market?

45.0%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: TKG (ZAR47.5) is trading below our estimate of fair value (ZAR86.35)

Significantly Below Fair Value: TKG is trading below fair value by more than 20%.

Price To Earnings Ratio

PE vs Industry: TKG is poor value based on its PE Ratio (9.7x) compared to the African Telecom industry average (8x).

PE vs Market: TKG is good value based on its PE Ratio (9.7x) compared to the ZA market (11.2x).

Price to Earnings Growth Ratio

PEG Ratio: TKG is good value based on its PEG Ratio (0.8x)

Price to Book Ratio

PB vs Industry: TKG's PB Ratio (0.7x) is in line with the XF Telecom industry average.

Future Growth

How is Telkom SA SOC forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

11.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: TKG's forecast earnings growth (11.8% per year) is above the savings rate (8.8%).

Earnings vs Market: TKG's earnings (11.8% per year) are forecast to grow slower than the ZA market (12.2% per year).

High Growth Earnings: TKG's earnings are forecast to grow, but not significantly.

Revenue vs Market: TKG's revenue (3.2% per year) is forecast to grow slower than the ZA market (6.1% per year).

High Growth Revenue: TKG's revenue (3.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: TKG's Return on Equity is forecast to be low in 3 years time (8.9%).

Past Performance

How has Telkom SA SOC performed over the past 5 years?

-18.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: TKG has high quality earnings.

Growing Profit Margin: TKG's current net profit margins (5.6%) are higher than last year (1.2%).

Past Earnings Growth Analysis

Earnings Trend: TKG's earnings have declined by 18.3% per year over the past 5 years.

Accelerating Growth: TKG's earnings growth over the past year (352.7%) exceeds its 5-year average (-18.3% per year).

Earnings vs Industry: TKG earnings growth over the past year (352.7%) exceeded the Telecom industry 29.6%.

Return on Equity

High ROE: TKG's Return on Equity (7.7%) is considered low.

Financial Health

How is Telkom SA SOC's financial position?

Financial Position Analysis

Short Term Liabilities: TKG's short term assets (ZAR15.9B) do not cover its short term liabilities (ZAR17.4B).

Long Term Liabilities: TKG's short term assets (ZAR15.9B) exceed its long term liabilities (ZAR15.1B).

Debt to Equity History and Analysis

Debt Level: TKG's debt to equity ratio (36.3%) is considered satisfactory.

Reducing Debt: TKG's debt to equity ratio has increased from 19.6% to 36.3% over the past 5 years.

Debt Coverage: TKG's debt is well covered by operating cash flow (97.5%).

Interest Coverage: TKG's interest payments on its debt are well covered by EBIT (6.4x coverage).

Balance Sheet

Dividend

What is Telkom SA SOC current dividend yield, its reliability and sustainability?

2.95%

Forecast Dividend Yield

Dividend Yield vs Market

Notable Dividend: Unable to evaluate TKG's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate TKG's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if TKG's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if TKG's dividend payments have been increasing.

Current Payout to Shareholders

Dividend Coverage: TKG is not paying a notable dividend for the ZA market.

Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of TKG's dividend in 3 years as they are not forecast to pay a notable one for the ZA market.

Next Steps

Explore strong dividend paying companies in the Telecom industry.

Management

How experienced are the management team and are they aligned to shareholders interests?

3.3yrs

Average management tenure

CEO

Sipho Maseko (52 yo)

8.5yrs

Tenure

R35,443,757

Compensation

Mr. Sipho Nkosinathi Maseko, BA, LLB., has been Group Chief Executive Officer and Executive Director of Telkom SA SOC Limited since April 1, 2013. He serves as Director at Roedean School (SA). He served as...

CEO Compensation Analysis

Compensation vs Market: Sipho's total compensation ($USD2.42M) is above average for companies of similar size in the ZA market ($USD922.82K).

Compensation vs Earnings: Sipho's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: TKG's management team is considered experienced (3.3 years average tenure).

Board Members

Experienced Board: TKG's board of directors are considered experienced (6.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2021/10/17 17:06
End of Day Share Price	2021/10/15 00:00
Earnings	2021/03/31
Annual Earnings	2021/03/31

Market Cap

7D

1Y

Updated

Data