Down 10% in a week – is the Telstra share price a buy?

Is the Telstra Corporation Ltd (ASX: TLS) share price in the buy zone today after shedding 10% of its value in the last week?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is the Telstra Corporation Ltd (ASX: TLS) share price a buy after shedding nearly 10% of its value in the last week?

Telstra shares have not coped well with the general market sell-off we have seen this week. It was only last Thursday when we saw Telstra shares going for $3.82. A week before that, these shares would have set you back $3.92.

But today, you can pick some up for just $3.44. That's a 9.95% drop in a week and a 12.2% drop over two.

Of course, Telstra did go ex-dividend yesterday for its 8 cents per share (cps) interim dividend (which is made up of a 5 cps ordinary dividend as well as a 3 cps 'special' dividend) – which wouldn't have helped. Still, it's a steep pullback for Australia's largest telco.

Why are Telstra shares falling?

Well, apart from the ex-dividend factor, Telstra seems to be well and truly caught up in the general market sell-off that we've seen this week – which in turn seems to be strongly related to the ongoing spread of the dreadful coronavirus outbreak.

Before these fears were gripping the stock market, the Telstra share price was also influenced by a 'ho-hum' half-year earnings report as well as news that it seems likely to have a more consolidated, cashed-up rival in the betrothed TPG Telecom Ltd (ASX: TPM) and Vodafone. The Federal Court has given the go-ahead for the TPG-Vodafone merger after overruling objections from the ACCC.

Is the Telstra share price in the buy zone today?

It's certainly more in the zone this week than last, to be sure. Today, Telstra is offering a defensive earnings base as well as a dividend that offers a fully franked, trailing yield of 4.64% (or 6.63% grossed-up).

Now I'm not detracting from the very serious issue of the coronavirus, but I do think that Telstra is a company that isn't particularly vulnerable to the threats it poses.

Telstra is a telco after all, and one that primarily sells mobile phones, data plans and internet connections at that. I don't envisage any scenario where its customers suddenly decide they don't want internet or phone plans, no matter the impact of this virus. The company's expansion plans (including 5G) remain on track and I'm bullish on Telstra's future.

Therefore, I think Telstra could be presenting a buying opportunity today, especially for those investors who are searching for some decent dividend income in today's market.

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

Businessman working and using Digital Tablet new business project finance investment at coffee cafe.
Technology Shares

Why are investors fighting to buy this speculative ASX stock today?

What is getting investors excited today? Let's find out.

Read more »

Two men laughing while bouncing on bouncy balls
Technology Shares

Top broker says ASX 300 tech stock has 18% upside after sell-off

ASX 300 investors overreacted in punishing the high flying tech stock yesterday, this top broker says.

Read more »

A young woman holds her hand to her mouth in surprise as she reads something on her laptop.
Earnings Results

Xero share price rockets to record high on explosive half-year growth

The tech star delivered another impressive half year results this morning.

Read more »

A young man goes over his finances and investment portfolio at home.
Technology Shares

These ASX 200 tech stocks just crashed! Is this a no-brainer buying opportunity?

Bell Potter thinks these tech stocks could be great options following declines this week.

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Technology Shares

Down 45% in 8 months, why this ASX 200 tech stock 'now looks attractive'

Down 45% since March, this investing expert sees good value in the ASX 200 tech stock.

Read more »

A man in a suit face palms at the downturn happening with shares today.
Technology Shares

Why is this ASX tech stock crashing 27% today?

Why are investors hitting the sell button? Let's find out.

Read more »

Man looks confused as he works at his laptop. watching the Magnis share price movements
Technology Shares

WiseTech share price in spotlight again as class action mounts

The headlines continue rolling in.

Read more »

Unsure man analysing data on laptop.
Earnings Results

ASX 200 tech stock sees red as investors punish Q3 results

Investors continue digesting the numbers.

Read more »