With earnings season on the horizon, I thought I would take a look at what is expected from some of Australia's most popular companies.
On this occasion, I'm going to take a look at telco giant Telstra Corporation Ltd (ASX: TLS).
What is expected from Telstra in the first half of FY 2021?
According to a note out of Goldman Sachs, it believes 2021 will be a pivotal year for the ANZ telecom sector.
It notes that mobile revenue and earnings growth are set to return in the second half, supported by ongoing rationality. It is expecting further price rises from Optus by July.
In addition, following the completion of the NBN in December, Goldman believes industry fixed earnings will begin to stabilise late in the year.
The broker expects the improving fixed and mobile earnings' outlook to drive a re-rating in the sector and support shareholder returns. This will be supplemented by an attractive dividend yield, with further upside potential through asset sales such as Telstra's TowerCo.
In respect to its half year update, Goldman Sachs is expecting Telstra to report an 8% decline in revenue to $12,318 million.
Things will be a little softer on the earnings front. The broker is forecasting a 15% decline in earnings before interest, tax, depreciation and amortisation (EBITDA) to $3,971 million and a 26% reduction in net profit after tax to $941 million.
From this, its analysts are expecting Telstra to pay out an 8 cents per share fully franked dividend.
What about the full year?
Goldman will also have its eyes on its guidance for the full year.
At present, the broker is estimating headline EBITDA of $7,672 million versus guidance of $7,200 million to $8,000 million. This compares to the consensus estimate of $7,655 million.
It is also forecasting underlying EBITDA of A$6,809 million versus guidance of $6,500 million to $7,000 million and capex (excluding spectrum) of $2,947 million versus guidance of $2,800 million to $3,200 million.
Finally, a 16 cents per share fully franked dividend is expected for FY 2021. Based on the latest Telstra share price, this represents a 5% dividend yield.
Goldman Sachs has a buy rating and $3.80 price target on the company's shares.
