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Forget the BT share price. I’d buy this FTSE 250 growth stock today

After losing more than 25% of its value over the past 24 months, at first glance, the BT (LSE: BT) share price looks cheap, particularly when compared to its trading history.

However, I think these shares now look appropriately valued, considering the company’s falling earnings, massive debt pile and unsustainable dividend yield of 6.6%. After years of under-investment in its network, the group is also struggling to fight off competitors such as Telecom Plus (LSE: TEP).

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Time to buy?

Shares in this £1.2bn market cap company are falling today after Telecom Plus published a downbeat trading update, warning that profit for the year would come in at the lower end of expectations following the introduction of Ofgem’s price cap.

According to management, adjusted profit before tax is now expected to be at the lower end of its prior forecast of about £56m.

Looking past 2019, management seems extremely optimistic that the firm can return to growth. In today’s trading update, the company reported an “acceleration in customer growth during the course of the year” and this growth, coupled with a small increase in gross profit margins (due to improved supply agreements) means management is now expecting “profits before tax of between £60m and £65m for FY2020.

So, while it seems as if the company’s profits will come in below expectations for 2019, growth will return next year. And with this being the case, I think today’s declines could be an excellent opportunity for investors to snap up shares in this leading utility provider.

Unlike BT, which has some of the worst customer satisfaction reviews in the industry, Telecom Plus, which offers gas, electricity, landline, broadband and mobile services through its Utility Warehouse business was recently proclaimed the Utilities Brand of the Year for 2018 by consumer magazine Which? The company also has the edge over its competitors because it can provide a bundle of services to customers and offers rewards for those who take up the full package.

As well as the services listed above, it also offers home insurance and cashback when shopping at over 2,000 retailers.

Unique offering

With award-winning customer service and a unique customer offering, I think Telecom Plus is one of the most attractive investments in the utility sector. Unfortunately, the shares are quite expensive. They are currently dealing at a forward P/E of 23.4, and the dividend yield is only 3.7% at the time of writing. However, the firm’s distribution to shareholders has risen by an average of 10% per annum for the past six years, and considering its earnings growth trajectory I think it is worth paying a premium to buy the shares.

In comparison, shares in BT are dealing as a forward P/E of just 9 at the time of writing. This might look cheap, but considering the fact that BT lost thousands of customers last year, and City analysts are expecting the group’s earnings per share to decline approximately 20% over the next two years, I think it deserves this lowly multiple. In my opinion, it is not worth buying struggling BT just because it is cheap. I would much rather pay a high price to acquire Telecom Plus’s sector-leading growth.

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Rupert Hargreaves owns no share 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.