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TELUS Corp TU

Morningstar Rating
$16.01 −0.18 (1.11%)
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Company Report

Rogers, Telus, and BCE: The Selloff is Overdone; We Favor Rogers, but All Three Look Like Bargains

The Big Three Canadian telecom firms have all sold off substantially over the past month after members of Parliament summoned the three CEOs to testify before a House of Commons committee. The CEOs were grilled on March 18 and the MPs have not yet taken action. While vilifying telecom firms is popular, and consumers undoubtedly desire lower prices, we don’t expect major regulatory changes. We’re maintaining our fair value estimates of CAD 78 for Rogers, CAD 33 for Telus, and CAD 60 for BCE.

Price vs Fair Value

TU is trading at a 33% discount.
Price
$16.18
Fair Value
$48.00
Uncertainty
Low
1-Star Price
$21.00
5-Star Price
$17.20
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

With its buildout of a fiber fixed-line network, Telus' network quality has eclipsed that of primary competitor Shaw over much of its footprint. This should propel continued strength in wireline pricing, margins, and share gains.

Bears

A combined Quebecor and Freedom Mobile should make for Canada’s strongest-ever fourth national wireless competitor, and it will undercut the Big Three on price, limiting pricing power and pressuring margins.

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News

Trading Information

Previous Close Price
$16.19
Day Range
$16.0116.14
52-Week Range
$15.4821.34
Bid/Ask
$16.00 / $16.01
Market Cap
$23.67 Bil
Volume/Avg
102,831 / 2.6 Mil

Key Statistics

Price/Earnings (Normalized)
21.68
Price/Sales
1.59
Dividend Yield (Trailing)
6.82%
Dividend Yield (Forward)
5.08%
Total Yield
6.82%

Company Profile

Telus is one of the Big Three wireless service providers in Canada, with over 10 million mobile phone subscribers nationwide constituting about 30% of the total market. It is the incumbent local exchange carrier in the western Canadian provinces of British Columbia and Alberta, where it provides internet, television, and landline phone services. It also has a small wireline presence in eastern Quebec. Mostly because of recent acquisitions, more than 20% of Telus’ sales now come from nontelecom businesses, most notably in the international business services, health, security, and agriculture industries. The firm has a 55% economic stake in Telus International.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Value
Total Number of Employees
106,400

Competitors

Valuation

Metric
TU
QBR.B
BCE
Price/Earnings (Normalized)
21.6810.4913.96
Price/Book Value
1.964.012.42
Price/Sales
1.591.301.66
Price/Cash Flow
6.614.515.04
Price/Earnings
TU
QBR.B
BCE

Financial Strength

Metric
TU
QBR.B
BCE
Quick Ratio
0.540.410.52
Current Ratio
0.670.660.65
Interest Coverage
1.823.173.13
Quick Ratio
TU
QBR.B
BCE

Profitability

Metric
TU
QBR.B
BCE
Return on Assets (Normalized)
2.47%5.79%4.16%
Return on Equity (Normalized)
8.37%44.26%16.71%
Return on Invested Capital (Normalized)
5.34%10.47%6.90%
Return on Assets
TU
QBR.B
BCE
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Telecom Services Industry Comparables

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Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
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T
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DTEGY
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AMX
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CHTR
Charter Communications Inc Class AYwgtbwbhKcqbr$39.2 Bil
ORAN
Orange SA ADRLjnhtgqmCcssn$30.5 Bil
BCE
BCE IncFfhmdyhyszBbxwb$30.1 Bil

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