Is It Time To Sell BT Group plc and Standard Chartered PLC?

There’s no denying that BT’s (LSE: BT.A) (NYSE: BT.US) performance over the past few years has been impressive. Indeed, over the past five years BT has outperformed the FTSE 100 by around 140% excluding dividends. But now, after these impressive gains, it could be time to sell up. 

Impressive gains BT

BT has transformed itself during the past decade, from an old fashioned fixed-line telecommunications company to an integrated-media giant. The company’s drive to expand into the pay-TV market has really paid off and earnings have nearly doubled since 2009. 

So, after such a strong performance, it seems silly to suggest that investors should be thinking about selling. However, there are a few reasons why it could be time to take some money off the table.

For example, the company now looks expensive compared to both its historic valuation and projected growth rate. Additionally, competition across the integrated-media sector is increasing and the company’s number of fixed-line customers continues to decline. 

In particular, BT currently trades at a forward P/E of 12.8, which is significant above the company’s five year historic average of 9.9. Then there’s the recently announced deal between BSkyBSky Italia and a Sky Deutschland AG, which would give BSkyB, BT’s main competitor, access to 20 million subscribers in five countries and a serious competitive advantage. 

Standard CharteredStruggling 

It’s no secret that Standard Chartered (LSE: STAN) (NASDAQOTH: SCBFF.US) is struggling. The main concern now facing the bank is the deterioration of credit conditions within Asia, China specifically. Standard saw first-half credit impairments jump by 39% to more than $1bn.

Further, City analysts pointed out that during the first half of the year the value of loans Standard considered to be of poor credit quality exploded to $5.1bn, up from the previously reported figure of only $1.7bn.  

Unfortunately, the bank is also facing the prospect of hefty fines, as U.S. regulators have found new problems with the bank’s surveillance system. Essentially, this means that the bank’s money-laundering controls are not up to scratch, and comes two years after the bank was fined $340m for hiding $250bn of transactions with Iran. 

Many problems

But these are just two of Standard’s many problems. In addition, the bank reported that profit during the first half of the year had fallen 20%, and shareholders are losing patience with the bank’s management.

What’s more, some City analysts have expressed concern that the bank could be forced to cut it hefty dividend payout in order to conserve capital. Standard’s core tier 1 ratio — its financial cushion — fell to 10.5% at the end of the second quarter, down from 11.8% as reported at the end of 2013.

Value hunters 

Still, for risk-takers Standard could present an attractive opportunity. The bank currently trades at a forward P/E of 11 and supports a dividend yield of 4.2%, although as covered above, this payout could be under threat. So, I’d strongly suggest you look a little closer at the company before making any trading decision.

However, placing a valuation on banks is never a simple task, and to help you conduct your own analysis, our analysts here at the Motley Fool have put together this free report entitled, "The Motley Fool's Guide To Banking".

This exclusive FREE wealth report provides six key 'City insider' valuation metrics for each bank traded in London. That's right, the report is not just limited to Standard Chartered -- it gives a rundown of the whole industry.

The results are surprising -- and revealing. This report is free and without obligation. To get your copy, click here.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool has recommended British Sky Broadcasting. The Motley Fool owns shares of Standard Chartered. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.