Why has the BT Group plc share price beaten the FTSE 100 in the last 6 months?

Is further outperformance of the FTSE 100 ahead for the BT Group plc (LON:BT.A) (BT.A.L) share price?


The last six months have been a relatively positive period for the BT Group plc (LON:BT.A) (BT.A.L) share price. It has been able to rise by 21%, while the FTSE 100 has declined by around 11% during the same time period.

In my view, this 33% outperformance of the index is because of a couple of different reasons. First, the BT share price had already endured a significant fall over recent years, with it declining from around 500p three years ago to as low as 203p earlier this year. As a result, it was relatively cheap in my view, with investors already having priced in challenges and risks facing the business.

In contrast, the FTSE 100 had risen to reach a record high about six months ago. As such, it could be argued that the stock was trading at a significant discount to many of its index peers.

Alongside this, the company also appears to be making encouraging progress with the delivery of its revised strategy in my view. In its most recent quarter it delivered headcount reductions that could cut costs and lead to improving financial performance over the long run. And with a new CEO set to arrive in the New Year, it wouldn’t surprise me if investors continue to be more optimistic about the company than they have been in recent years.

That said, I feel that BT continues to face an uncertain outlook. It is forecast to record falling EPS in the next two years, while more changes to its strategy could be ahead if the new CEO decides that there could be a better growth path for the business to take.

As a result, I’m cautiously optimistic about the prospects for the stock. I think that it could generate improving performance, but it may be volatile in the near term.

About Robert Stephens 5430 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 info@investomania.co.uk or use one of the other contact methods available on the 'Contact Us' page