Telecommunications and networks provider BT (LSE: BT.A) has seen its share price rise for most of 2023.
And near 149p, its around 33% higher than in January, although the stock has slipped back around 7% over the past month. But that may just be ânoiseâ.
Is this business turning?
However, the rise this year is meaningful. And it may be signalling the beginning of a sustainable turnaround in the business.
If thatâs the case, the current valuation looks tempting. After all, the dividend yields above 5%, based on City analystsâ projections for the trading year to March 2024. And thatâs handy income to collect in a share account.
However, the company still has a lot of work to do to get the enterprise back to good health. And one way of judging the rate of improvement is by looking at expectations for the dividend.
On that score, things could be better. The directors rebased the shareholder payment lower after the pandemic and now itâs around half the level in 2019. But analysts donât expect it to grow much and have pencilled in miniscule advances of less than 1% a year ahead.
Meanwhile, to put things in perspective, the stock has fallen by around 18% over the past year. And thatâs despite the partial bounce-back recorded since January.
The full-year results should be with us tomorrow. But will they contain any unexpected positives that may push the share price higher?
Maybe. But Iâm not holding my breath in anticipation. The City braces have pencilled in an uplift in earnings of almost 14% for the reporting year to March. But that improvement is likely to be already factored in and could be the reason for the share-price buoyancy this year.
Outlook and dividends
Sometimes full-year reports cause a dip in share prices, at least in the short term. And that can happen when everything is reported âas expectedâ, or slightly below anticipated figures.
Itâs the old adage in operation â sometimes itâs better to travel than to arrive.
Perhaps the most value weâll get from tomorrowâs anticipated report is the updated outlook statement. If the directors can raise expectations a little, itâs conceivable that the current short-term slide in the share price could be arrested.
But right now, analysts are a little gloomy and forecast a dip of about 6% in earnings for the trading year to next March.
In the current challenging economic environment â especially for consumers â Iâd be surprised if we donât hear more talk about difficult trading conditions from BT tomorrow.
Meanwhile, the company is still nursing a huge mountain of debt on the balance sheet. And no matter what the business, itâs often easier without a debt-burden than with one.
Iâm not expecting the BT business to set the world alight with its growth trajectory any time soon. Although I do concede that the venerable old name has plenty of ongoing turnaround potential.
For me, key to any investment in the shares today is the potential sustainability of the shareholder dividend. So Iâll be looking for clues in tomorrowâs update.
The post Will tomorrowâs results move the BT share price? appeared first on The Motley Fool UK.
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More reading
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- I’d buy 15,000 BT shares for £100 in monthly passive income
Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.