The Motley Fool

Why Telstra is up 40%

Shares of Australia’s leading telco and ISP Telstra (ASX: TLS) have risen 40% in the last twelve months, versus a 16.5% rise in the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO). What’s behind this smashing outperformance, and most importantly for investors, can it continue?


First half 2013 financial performance and CEO comments

For the first half of 2013, chief executive David Thodey reported to analysts that, “Total income increased by 1.7%, EBITDA grew by 5% and NPAT, Net Profit After Tax, up 8.8%.”

Telstra continues to consolidate market share as well, Thodey reported: “We continue to gain share in key products and we added 607,000 new domestic mobile customers and the fixed broadband business continues to perform strongly with an additional 85,000 retail fixed broadband customers.”

Looking forward with product improvements, “We’re on track with our 4G network expansion to 66% of the population by the end of June this year. On the fixed side we completed an upgrade to almost 2,000 sites enabling around 480,000 customers to access ADSL2+,” Thodey said.

Yet even these strong results don’t tell the entire story.

Plus, new $1.1 billion deal

Most recently, Telstra announced it has signed a deal worth a whopping $1.1 billion with Defence to provide telecommunications services for the next six and a half years, with the company slated to “deliver technology that can become the backbone of Australian Defence for the next decade and beyond.”

Today, with Telstra shares now trading for 17 times earnings, or an enterprise value to EBITDA ratio of about 7, it seems Mr. Market has caught up to this company’s growing strength.

So are Telstra shares still a buy? Discover one top analyst’s answer to this compelling question in The Motley Fool’s brand-new FREE report, “Is It Time to Sell Telstra?” It’s free, click here for your instant download!

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.



NEW. The Motley Fool AU Releases Five Cheap and Good Stocks to Buy for 2020 and beyond!

Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.