Over the past year, the Telstra Corporation Ltd (ASX: TLS) share price has performed the equivalent of a 2/10 double-pike nosedive.
In other words, the share price has hit rock bottom.
TLS share price
The graph above shows Telstra (blue line) falling 29% and the market, or S&P/ASX 200 (Index: ^ AXJO) (ASX: XJO), rising 6%. That is 35% underperformance. Ouch.
Is Telstra about to bounce back?
Telstra's recent move to lower its future dividend payments was not surprising. But it was shocking for shareholders who bank the cheques as cold hard cash. The dividend stalwart has yet again proven to investors that no dividend payment is guaranteed.
But when the market is in a panic, it's time to go shopping for quality businesses.
And at today's prices, Telstra is expected to yield a dividend over 6% fully franked, given its forecast dividends at 22 cents per share. Of course, that's a far cry from its 31 cents per share. But it is still impressive.
On the valuation front, assuming Telstra can meet current profit forecasts, it is trading at 12 times profit. Again, not a bargain. But it is getting close to it!
Foolish Takeaway
Undoubtedly, Telstra has some holes in its profit that need to be plugged. And competition in mobiles from the likes of TPG Telecom Ltd (ASX: TPM) is being turned up. However, although I am reluctant to call it a screaming buy at today's prices, I am taking a closer look because it appears cheap at around $3.60.
