This year has been an important one for BT Group plc (LON:BT.A) (BT.A.L) in my opinion. It has decided upon a new strategy which seems to be being delivered according to its recent update. It has also appointed a new CEO who is due to commence work in early 2019.
So, while its shares are down by around 10% since the start of 2018, I feel that the capital growth it has delivered in the second half of the year has been positive for the company’s investors.
Next year could also be a crucial period for the company. The new CEO may seek to make further changes to its business model in my opinion. Although he may stick to the current strategy, from my experience new CEOs often wish to add value through implementing a refreshed strategy. This could cause a degree of instability for the stock in the short term, and may mean that its shares continue to experience above-average volatility.
Further, BT’s EPS growth is due to remain negative in 2019. This may mean that investors remain cautious about its prospects – particularly since a number of other TMT stocks are due to post rising EPS over the medium term. And while there has been progress in reducing headcount according to its recent updates, the company’s top and bottom-line growth has remained at relatively modest levels. As a result, there could be some way to go before the business delivers on its potential.
In future years, I feel that BT has turnaround potential. This year has represented an improvement in terms of strategy in my opinion but I feel that it could take time for it to deliver a sustained recovery. As a result, I’m cautious about its investment prospects for 2019 after what has been a mixed 2018, with further changes potentially ahead.