Could BT Group plc continue to outperform the wider stock market?

Does BT Group plc (LON:BT.A) (BT.A.L) offer a relatively sound investment outlook?




BT
BT

Over the last six months, the BT Group plc (LON:BT.A) (BT.A.L) share price has risen by around 10%. During the same time period, the FTSE 100 has fallen by around 11%. That’s a strong outperformance from the telecoms company in my view, and suggests that there has been a significant shift in investor sentiment after what was a challenging first half of the year.

One reason for the improved performance of the company’s shares could be its strategy change. It was announced in 2017, and the recent update from the company suggested to me that it is making progress with its implementation.

For instance, BT has been able to make headcount reductions. This could help to cut its total costs over the medium term and may lead to a stronger company which is more easily able to adapt to changing operating conditions.

Of course, sales and profit growth continue to be relatively low. In fact, in the next two financial years the business is due to report further falls in EPS. This could keep investor sentiment pegged back to some degree in my opinion, since I feel that investors may be waiting for improved financial performance after what have been numerous investments and strategy changes in recent years.

With a new CEO set to start work at BT in the near term, investors may begin to anticipate improved performance. However, I feel that there is some way to go before the company is able to generate relatively impressive financial performance after what has been a sustained period of difficulty.

During that time, there could be further volatility ahead, and this may mean that its future share price performance fails to match its outperformance of the FTSE 100 over the last six months. Therefore, while I think there could be a recovery in the long run, I’m cautious about the company’s near-term outlook during a period of significant change for the business.




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