At 140p, is the BT share price as cheap as it looks? Here’s what the charts say!

After a weak performance in recent times, the BT share price is on the up. But does that mean its time to buy? This Fool takes a closer look.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: BT Group plc

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The BT (LSE: BT.A) share price has been steadily trending upwards in 2024. Year to date, it has climbed 11.6%.

But even with that, the stock is still down 30.7% over the last five years. Back then, I would have forked out 201.4p for a share. Today, its share price is significantly cheaper at 140p.

Created with Highcharts 11.4.3Bt Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

However, could that mean BT is now one of the best bargains on the FTSE 100? Its struggles in recent years are well-known. Nevertheless, could this be an opportunity for potential investors to consider snapping up a Footsie stalwart for a slashed price?

Should you invest £1,000 in NatWest Group right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if NatWest Group made the list?

See the 6 stocks

Price-to-earnings

While on paper BT shares look dirt cheap, I think it’s important we take a closer look at whether that’s really the case. To do this, I want to look at its price-to-earnings ratio.

As seen below, it currently sits at 16.6. That’s a lot higher than it was at the beginning of the year (6.8). It’s also above the Footsie average of 11. Based on that, while I’d argue BT isn’t overpriced, it may not be the bargain it looks like.


Created with TradingView

A silver lining

That said, there’s one major positive I see with BT. That’s its bulky dividend yield. As seen below, the stock yields 7.3%. That’s way above the Footsie average (3.6%). What’s more, it has been rising since March 2023.


Created with TradingView

Time to buy?

While I don’t think BT is an attractive investment as it looks on paper, I still see plenty to like about the business.

Its share price has been picking up pace recently largely due to its full-year results released last month. BT has been heavily investing in its fibre optic broadband and 5G rollout in recent years. Finally, it seems like we’re at the point where we could begin to see the positive impacts of this. That has shareholders excited.

There’s also the passive income angle. Its meaty yield is enticing. Management also seems keen to enhance shareholder returns, which is encouraging. Last year it hiked its dividend by 3.9% to 8p per share.

With the firm reaching its maximum capital expenditure for its rollout, this should help boost free cash flow in the years ahead. That could lead to management rewarding shareholders even further with the excess cash it has.

Large debt

But then again, there are factors that may hinder this. For example, looking at its balance sheet, I’m alarmed by the pile of debt the firm has on its books. It continued to rise last year. It now sits at £19.5bn. That’s a concerning amount. The main reason for the increase has been pension scheme contributions.

Another concern of mine is BT’s falling market share as new competitors continue to enter the space.

My move

BT may look cheap but it’s a stock I’ll be avoiding for now. Its debt is my largest concern. I reckon that could hinder growth moving forward.

I see plenty of other FTSE 100 value stocks that look like better buys for my portfolio. I’ll look to pick them up before I consider BT.

But here’s another bargain investment that looks absurdly dirt-cheap:

Like buying £1 for 31p

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

2 FTSE 100 and FTSE 250 stocks to consider as stock markets plummet!

Looking for lifeboats as growth-crushing trade tariffs loom? Here are two (including a FTSE 100 gold stock) I think merit…

Read more »

Number three written on white chat bubble on blue background
Investing Articles

Just released: the 3 best growth-focused stocks to consider buying in April [PREMIUM PICKS]

Our goal here is to highlight some of our past recommendations that we think are of particular interest today, due…

Read more »

Happy young plus size woman sitting at kitchen table and watching tv series on tablet computer
Investing Articles

£10,000 invested in Watches of Switzerland shares 1 year ago is now worth…

Watches of Switzerland shares have been decimated by Trump’s tariffs on Switzerland. Dr James Fox explores whether this is an…

Read more »

Hand flipping wooden cubes for change wording" Panic " to " Calm".
Investing Articles

Growth stocks are crashing! Here’s what I’m doing now

Our writer shares his thoughts as growth stocks get crushed, as well as a favourite from the Nasdaq that he…

Read more »

Investing Articles

What’s going on with the Nvidia share price now?

The Nvidia share price is tanking. Once the most valuable listed company, Nvidia has seen more than $1trn wiped off…

Read more »

Investing Articles

This FTSE AIM stock has £2.3bn in net cash, and a market cap of £2.4bn!

I love this FTSE AIM stock, but it really hasn’t delivered for me yet. The stock trades with crazily low…

Read more »

Smart young brown businesswoman working from home on a laptop
Investing Articles

Down 15% in a week! Are these 5 FTSE 100 fallers screaming buys as markets plunge?

Five of Harvey Jones's favourite FTSE 100 stocks all have the same thing in common – they've fallen around 15%…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

2 stocks that have been crushed and now offer a ton of value

Edward Sheldon has been scanning the market for stocks that offer value after the sell-off. Here are two shares he…

Read more »