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Blue chip or not?

Roger Montgomery

Montgomery Investment Management

Telstra has reported its results for the six months ended 31 December 2015.

Using a telescope rather than a microscope says this is no blue chip:

  • Reported total income excluding financial income $14.2 billion
  • Reported EBITDA $5.4 billion
  • Net profit after tax $2.1 billion
  • Earnings per share 17.2 cents
  • Fully franked interim dividend of 15.5 cents
  • Capital expenditure $2.1 billion

And here are the results for the same numbers for the same half, a decade ago.

Results for the six months to 31 December 2005

  • Reported total income excluding financial income $11.6 billion
  • Reported EBITDA $5.3 billion
  • Net profit after tax $2.1 billion
  • Earnings per share 17.3 cents
  • Fully franked interim dividend of 20 cents
  • Capital expenditure $1.81 billion

And here are the percentage changes for each item over the 10-year period. Note, these are total changes NOT per annum changes.

  • Reported total income excluding financial income +22%
  • Reported EBITDA +1.8%
  • Net profit after tax –no change
  • Earnings per share –(1/2%)
  • Fully franked interim dividend of –(22.5%)
  • Capital expenditure +16%

Enough said.

P.S. Does your fund manager own Telstra? Does your Individually Managed Account hold Telstra? No one has ever been sacked buying Telstra. Right? Maybe they should be.


1 stock mentioned

Roger Montgomery
Founder and Chairman
Montgomery Investment Management

Roger Montgomery founded Montgomery Investment Management, www.montinvest.com in 2010. Roger has than three decades of experience in investing, financial markets and analysis. Roger also authored the best-selling investment book, Value.able.

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