After three years of falling EPS, it is perhaps unsurprising that the BT Group plc (LON:BT.A) (BT.A.L) share price is around half of its level from three years ago. And with the company due to report falling EPS in the next two years, the prospects for the telecoms company continue to be relatively downbeat at first glance.
In my view, though, the company could be putting in place the right strategy through which to generate improving financial performance. And, in time, this could filter through to a higher share price in my opinion.
The company’s recent update suggested that it has been able to implement the start of its revised strategy. It includes significant headcount reductions, while seeking to invest in its consumer offering as it aims to improve its competitive position versus industry peers.
BT has invested heavily in areas such as pay-tv and mobile in recent years. Although the payback from this investment has not yet been realised according to my research, I think that it could provide a stronger platform for future growth.
Alongside this, its focus on reducing costs could lead to a stronger and more efficient business which is better able to deliver a return to positive EPS growth. And with a new CEO set to start in the New Year, further refinements to its strategy could be ahead, and they may provide further catalysts over the long run.
Of course, I think it will take time for BT’s share price performance to be transformed. Investors may await improved financial prospects before becoming more bullish about the stock. And given its uncertain outlook, I think that its shares could remain volatile in future months.
In the long run, though, I’m optimistic about its turnaround potential. While it has been a challenging few years, I believe the company’s strategy could lead to improving financial performance and a higher stock price in future years.