The Telstra Corporation Ltd (ASX: TLS) share price has come under pressure on Thursday.
At the time of writing, the telco giant’s shares are down over 3% to $3.94.
Why is the Telstra share price falling?
Investors have been selling down the Telstra share price following the release of its half year results.
In case you missed it, for the six months ended 31 December, Telstra reported a 4.4% decline in revenue to $10.5 billion but a 5.1% lift in underlying EBITDA to $3.5 billion. This reflects one-off benefits in the prior corresponding period, solid growth in the mobile business, and a 6.7% decline in operating expenses to $7.4 billion.
In respect to dividends, the telco has declared a fully franked interim dividend of 8 cents per share. This was flat compared to the prior corresponding period.
Looking ahead, management has reaffirmed its FY 2022 guidance. This includes full year underlying EBITDA of $7 billion to $7.3 billion and free cash flow after lease liabilities of $3.5 billion to $3.9 billion.
How does this compare?
The team at Goldman Sachs was pleased with the result and notes that its “strong mobile beat offsets fixed declines.” In fact, despite what the Telstra share price performance today might indicate, the company’s earnings actually came in ahead of the broker’s expectations.
Goldman commented: “Telstra has reported underlying 1H22 Income/EBITDA/NPAT of A$10.7bn/A$3.5bn/A$825mn, which was -2%/+2%/+16% vs. our estimates. Cash conversion was strong with GOCF = 97% of EBITDA. Balance sheet gearing decreased marginally to 1.9X ND/EBITDA at 1H22 (vs. 2X at FY21, comfort bands 1.5-2X). An interim dividend of 8¢ps was declared (GSe 8¢ps), comprising a 6¢ps ordinary and 2¢ps special.”
The broker was particularly pleased with the performance of the key mobile business.
It said: “Mobile again the standout, with EBITDA +8% vs. GSe on strong mobile service revenues (+1% vs. GSe). We note although postpaid ARPU growth and subscriber growth were largely in-line with GSe, TLS was also impacted by a $1.50 (3%) ARPU accounting impact which would have a stronger revenue outcome & hence explains the EBITDA beat.”
Goldman currently has a neutral rating and $4.40 price target on the Telstra share price. Though, that could change once it has fully digested the result.
Overall, a solid result from the telco giant but some investors appear to have been expecting even better.
The post Telstra (ASX:TLS) share price slides 3% despite ‘strong mobile beat’ appeared first on The Motley Fool Australia.
Should you invest $1,000 in Telstra right now?
Before you consider Telstra, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Telstra wasn’t one of them.
The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of January 13th 2022
More reading
- ASX 200 (ASX:XJO) midday update: Telstra, Wesfarmers, and Woodside report
- Hold the phone! Telstra (ASX:TLS) delivers solid underlying growth and declares 8cps dividend
- 5 things to watch on the ASX 200 on Thursday
- Own Telstra (ASX:TLS) shares? Here’s what to watch when the ASX 200 telco reports this week
- These are some of the top performing ASX 200 value shares of the past year
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
from The Motley Fool Australia https://ift.tt/MF3rvsn
Leave a Reply