How did the Telstra (ASX:TLS) share price respond last earnings season?

How did the company’s shares perform following its half-year results?
The post How did the Telstra (ASX:TLS) share price respond last earnings season? appeared first on The Motley Fool Australia. –

The Telstra Corporation Ltd (ASX: TLS) share price reached a 52-week high yesterday on the back of its upcoming results. It appears investors are upbeat about the company’s performance in FY21, sending its shares on an upwards trend.

After the market close on Tuesday, the telco’s share price rallied 0.79% higher to $3.85. This means that its shares are now 30% higher than its November 2020 lows of $2.66.

Below, we take a closer look to see what we can learn from the Telstra share price performance last earnings season.

What happened in the first half of FY21?

In mid-February 2021, Telstra delivered its half-year results to the ASX, reporting a fall across key metrics.

Here’s a quick summary of the highlights mentioned in the H1 FY21 release:

Total income decreased by 10.4% to $12 billion due to a drop off in consumer and small business revenue.

Earnings before interest, tax, depreciation and amortisation (EBITDA) declined by 14.2% to $3.2 billion due to NBN headwinds and COVID-19 impact
Net profit after tax (NPAT) shed 2.2% to $1.1 billion.

Despite the disappointing performance, investors pushed up Telstra shares from $3.17 on 10 February to $3.33 in the days following. However, its share price rise was short-lived, soon plummeting to as low as $3.04 on 11 March. This represents a decline of around 10% in the space of 4 weeks.

What should investors look out for this earnings season?

With Telstra scheduled to report its full-year results on Thursday, investors may be wondering what’s on the cards.

According to Goldman Sachs, the market is expecting another loss for its second-half FY21 results.

Total income is forecasted to fall around 11% to $23.2 billion. Although, this is within the upper end of its previous guidance range of $22.6 billion to $23.2 billion.

EBITDA is also projected to fall 16% to $7.6 billion, consisting of underlying EBITDA down 8% to $6.81 billion. Again, this is within prior estimates of $6.6 billion and $6.9 billion.

NPAT is predicted to fall 27% to $1.7 billion.

Regardless of the lower results, Telstra is assumed to pay a fully-franked final dividend of 8 cents per share.

Telstra share price snapshot

In 2021, the Telstra share price has gained close to 30%, reaching pre-pandemic levels. If the company’s share price can surge above the $4 mark, it will be at a multi-year high from 2017.

Telstra commands a market capitalisation of around $45.8 billion, making it the 12th largest company on the ASX.

The post How did the Telstra (ASX:TLS) share price respond last earnings season? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras owns shares of Telstra Corporation Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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