Does BT Group plc offer long-term investment potential?

Could BT Group plc (LON:BT.A) (BT.A.L) deliver improving share price performance?

BT Group plc
BT Group plc

The prospects for the BT Group plc (LON:BT.A) (BT.A.L) share price could be relatively uncertain in the near term in my view. The company is in the process of implementing a new strategy which includes a major headcount reduction. However, it is set to be fully implemented by a new CEO who is due to start work in early 2019.

In my opinion, this could mean that it is difficult to know how the company will look in terms of its structure and operational performance in the next couple of years. As a result, I wouldn’t be surprised if its share price continues to be volatile, and that investors still demand a margin of safety before investing in it.

In the long run, though, I remain optimistic about the company’s investment potential. I believe that BT has a strong position within a number of key markets. This could provide it with the opportunity to deliver growth, but it may take some time for its strategy to have the desired impact. After all, it is due to post declining EPS in the next two financial years, and this may hurt investor sentiment even further.

With the company having a P/E ratio of around 9, I think that it could offer good value for money. Its income prospects may also be relatively bright, although a 6%+ dividend yield suggests that the stock market may be anticipating a lack of strong dividend growth over the medium term.

Therefore, in the near term I’m feeling uncertain about BT’s share price growth potential. Periods of change can lead to investors becoming increasingly unsure about a company’s prospects. But with a low valuation and what seems to be a strong position in the quad play industry, I’m nevertheless upbeat about the prospect of a successful recovery over the coming years.

About Robert Stephens 5151 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 [email protected] or use one of the other contact methods available on the 'Contact Us' page