Could BT Group plc be the next Lloyds Banking Group PLC?

Will BT Group plc (LON:BT.A) (BT.A.L) recover as successfully as Lloyds Banking Group PLC (LON:LLOY) (LLOY.L)?

Lloyds Banking Group PLC
Lloyds Banking Group PLC

During the course of this year, the BT Group plc (LON:BT.A) (BT.A.L) share price has fallen by around 15%. The company has experienced numerous challenges, including a profit warning and difficulties in its Italian division. However, in my eyes, it has recovery potential and could make a comeback in the long run just as Lloyds Banking Group PLC (LON:LLOY) (LLOY.L) has done in recent years.

In fact, 5 years ago the Lloyds share price was just 30p. It faced a highly uncertain future and was struggling financially. Since then, though, it has adopted a sound strategy which has seen costs fall, profitability improve and its balance sheet become stronger in my eyes. This has led to improved investor sentiment which has caused the Lloyds share price to more than double to its current level of around 65p.

In my opinion, BT has the potential to record a turnaround over the long run. I feel there could be further volatility in the near term, since investor sentiment is relatively weak and its financial outlook for the next couple of years is relatively lacklustre in my view when compared to other TMT companies.

However, with it investing heavily in sports rights and in its acquisition of EE, I feel the company could generate improved sales and profitability in future. Obviously, it may take time for this to take place. But with what seems to be a sensible restructuring programme and the cross-selling opportunities that come with being a dominant quad play operator, I feel BT could deliver a successful recovery in future years.

Therefore, I’m optimistic about the company’s investment prospects. I’m also upbeat about the investment potential of Lloyds, with its P/E of around 10 still being relatively low in spite of its more than doubled share price rise in the last 5 years.

About Robert Stephens 2805 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email or use one of the other contact methods available on the 'Contact Us' page