If you're one of the countless investors across Australia that own Telstra Group Ltd (ASX: TLS) shares, then you will no doubt be hoping for a good outcome when the telco giant releases its full-year results next week.
But what is the market actually expecting from Telstra next Thursday? Let's find out.
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Telstra FY 2023 results preview
The team at Goldman Sachs has been looking over industry data and appears confident that a solid result is coming next week.
According to the note, the broker believes Telstra will hit the top end of its FY 2023 earnings guidance range thanks to mobile plan increases and cost discipline.
That guidance is for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) in the range of $7.8 billion to $8 billion.
Its analysts commented:
We expect a strong FY23 result, towards the top end of its guidance range, given the strong 1H23 result and expected sequential benefits in 2H (Mobile pricing, NAS margins, recurring NBN CPI linked growth & improved cost performance). We believe the key risks to hitting the top end of guidance are the NAS margin given its volatility (GSe 14% in 2H23E vs. 8% in 1H23) and the 2H23 cost performance – noting Telstra needs to deliver sequential decline in 2H23 fixed costs to achieve a flat fixed-cost outcome in FY23.
In addition, the broker is expecting the telco to declare a fully franked final dividend of 8.5 cents per share. This will bring its full-year dividend to 17 cents per share, which is up by 0.5 cents year on year.
Goldman expects the following:
FY23 EBITDA +6% to $7.95bn (incl. $60mn NBN one-off) vs. guidance for $7.8-8.0bn, VA cons. $7.94bn; EPS +4% to 16.4¢ (VA 16.0¢); and final DPS flat at 8.5¢ (VA 8.5¢).
What about FY 2024?
Another factor that could have an impact on Telstra's shares is its guidance for FY 2024.
If this comes in ahead of expectations, then the company's shares could rally. And vice versa if it is short of them.
Goldman is expecting EBITDA growth of 6% in FY 2024, which is a touch ahead of the consensus estimate. It explains:
We expect: (1) FY24 Income +3% to $23.7bn; (2) EBITDA +6% to $8.40bn (VA $8.35bn); (3) Capex of $3.5bn (incl. $450mn project capex) – noting prior guidance for BAU capex of c.$3bn; and (4) FCFaL of $3.5bn. Although Telstra does not guide on dividends, we expect FY24 dividends to grow +1¢ to 18¢, consistent with consensus in FY24E.
Are Telstra shares a buy?
Goldman Sachs currently has a buy rating and a $4.80 price target on the company's shares. This implies a potential upside of almost 13% over the next 12 months.
