BT Shares Forecast August 2021 – Time to Buy BT.A Shares?
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Shares of BT Group (LSE: BT.A) are in the red today as they closed at 168.15p as of August 23rd (19:00 UTC+1). The decline in shares was due to one of its smaller rivals planning to raise money at a lower valuation than what experts suggested. Many investors are wondering whether the falling BT. A price presents a buying opportunity for them.
BT Group – Technical Analysis
According to BT Group’s financial statement, the company’s market cap is at £17.1833 billion with total assets worth £50.877 billion. BT Group share prices were flying as recently as June, reaching a 52- week high of 260p only to fall back since then, declining by 18.5%. Despite being 55% down over the past 5 years, it is still one of the few companies in the FTSE 100 that can make the pandemic crash look like a minor hiccup.
BT Group’s moving averages such as Exponential Moving Average (50)(178.79), Simple Moving Average (50)(185.61), Exponential Moving Average (100)(173.02) and Simple Moving Average (100)(176.3) are pointing towards a sell action. Oscillators such as Relative Strength Index (14)(32.51), Stochastic %K (14, 3, 3)(20.15), Commodity Channel Index (20)(−191.09) and Average Directional Index (14)(26.73) are neutral.
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Recent Developments
This year hasn’t been kind to BT Group especially when debt is concerned. As of June 30th 2021, its net debt stood at a massive £18.5 billion which is greater than the company’s market capitalisation. This takes its trailing P/E multiple to more than 18. Additionally, the company suffers from an £8 billion pension fund deficit which increases the P/E ratio to 23. The company expects to resume payments of dividends in 2021/22 at an annual rate of 7.7p per share. This would yield about 4.6% in today’s BT share price. All of this makes little sense from an investor standpoint, as the company has a massive debt, huge pension deficit and big capital expenditure needs.
Today, BT.A shares have a trailing price to earnings ratio of under 9 based on the year ended March 2021. This was also the year earnings-per-share plummeted by a massive 20%, the latest in a succession of failures in annual earnings for BT. One good thing that came out of this was that BT did not pay dividends for the 2020/21 year. The company recently appointed former ITV and Football Association chief executive Adam Crozier as chairman. Crozier has immense experience in this field with past stints in Royal Mail, ITV, Asos and Whitbread and was also a board member of Sony.
Should You Buy BT. A Shares?
For a company facing so many hurdles, BT has consistently paid high dividends to its shareholders for years. The company shelled out a 6.9 yield via 15.4p per share which was covered 1.7 times by earnings. This would be fine for a company that has no need for capital investment and has little debt, but that’s not the case here.
This has not deterred investor interest in BT, however. For instance, Patrick Drahi, founder of multinational telecoms firm Altice has a 12% interest in the company which is evidence of confidence in the firm’s future. There is also a high possibility of mergers and acquisitions happening in this sector in the near future. So even if the company performs well, the sector has a bullish near-term future. This has an impact on the future outlook of the company. Thus, investors would be wise to avoid BT.A shares as the company behind it is extremely debt-laden.
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