BT Group (BT:NYS) Fundamental Valuation Report

Fundamental Valuation Report

BT Group(BT:NYS)

Communication Services:Telecom Services

This Report was generated using the valuation tools available on For a free 30 day trial click here.

Close Price/Date
11.64 (GBP) / $14.91 (USD) 10/01/2019

Weighted Valuation
14.00 (GBP) / $17.93 (USD)

Use a conversion rate of 1.2809838 from GBP to USD.

Overall Rating
Undervalued by 20.3%

Valuation Models Analyst Consensus: 14.00 (GBP) / $17.93 (USD)
(in order of importance)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Overvalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation

Company Overview (BT:NYS USD)

Price 0.00
Range 0.00 – 0.00
52 week 0.00 – 0.00
Open 0.00
Vol / Avg. 0/0
Mkt cap 0
P/E 0.00
Div/yield 0.00/0.00
EPS 0.00
Shares 0
Beta 0.00

Company Description

BT Group, formerly known as British Telecom, is the incumbent phone operator and largest supplier of fixed-line phone services in Britain, with about 38% market share. BT’s external sales are split among EE (22%), global services (21%), consumer (21%), business (19%), wholesale (8%), and Openreach and other (9%). BT is the largest supplier of high-speed Internet lines, including lines it wholesales. It is also the largest wireless operator and the only company in the U.K. that owns both its own fixed-line and wireless networks. Despite global services’ reduced size as a percentage of BT’s revenue, it is still one of the largest international providers of managed networks and information technology services.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for BT:NYS

Using a discounted cash flow model we generated an intrinsic value of 19.68 (GBP) / $25.21 (USD) for BT:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

BT:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $19.68 1% 5% 1% 5%
WACC (or Ke) 6.96 $27.03 $14.80
Terminal Growth Rate 2.00 $15.13 $26.52
Tax Rate 0.20 $22.35 $17.00
Cash Flow 7,596,654,000 $16.74 $22.61
Capital Expenditures -2,716,600,000 $18.71 $20.64
Long Term Debt 17,157,081,000 $20.11 $19.25

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of 6.67 (GBP) / $8.54 (USD) for BT:NYS. We also generated a valuation of 9.66 (GBP) / $12.37 (USD) using other metrics and comparables.
The comparable companies were and Vodafone Group (VOD:NAS).

Company BT:NYS End Date Value
Earnings/Share 1.14 (GBP) / $1.45 (USD)
Book Value/Share 5.45 (GBP) / $6.99 (USD)
Sales/Share 11.62 (GBP) / $14.88 (USD)
Cash Flow/Share 1.53 (GBP) / $1.96 (USD)
EBITDA/Share 3.42 (GBP) / $4.37 (USD)
Price Based on Comps Adjustment Factor (%)
0.00 (GBP) / $0.00 (USD) -55.0
4.06 (GBP) / $5.21 (USD) 0.0
11.90 (GBP) / $15.24 (USD) -30.9
0.07 (GBP) / $0.09 (USD) -40.7
23.54 (GBP) / $30.15 (USD) -32.6
BT:NYS Ratios Used Average Values VOD:NAS
10.55 PE Ratio 0.00 0.00
2.18 PB Ratio 0.75 0.75
1.02 PS Ratio 1.02 1.02
7.77 PCF Ratio 3.68 3.68
5.23 EV to EBITDA 6.89 6.89


Using a multiples approach we generated a valuation of  17.14 (GBP) / $21.95 (USD) for BT:NYS

Company BT:NYS End Date Value
Earnings/Share 1.14 (GBP) / $1.45 (USD)
Book Value/Share 5.45 (GBP) / $6.99 (USD)
Sales/Share 11.62 (GBP) / $14.88 (USD)
Cash Flow/Share 1.53 (GBP) / $1.96 (USD)
EBITDA/Share 3.42 (GBP) / $4.37 (USD)
Price Based on Comps Adjustment Factor
17.44 (GBP) / $22.34 (USD) 0
17.51 (GBP) / $22.43 (USD) 0
18.52 (GBP) / $23.73 (USD) 0
9.01 (GBP) / $11.54 (USD) 0
23.20 (GBP) / $29.71 (USD) 0
Ratios Ratio Average
PE Ratio 15.37
PB Ratio 3.21
PS Ratio 1.59
PCF Ratio 5.90
EV to EBITDA 6.79

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  BT:NYS for the last 7 years was  3.35

We ran the Adjusted Book Value for  BT:NYS and generated a book value of  1.04 (GBP) / $1.33 (USD)
By multiplying these we get an adjusted valuation of  3.48 (GBP) / $4.46 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for BT:NYS. The 4 analysts have a concensus valuation for BT:NYS for 2020 of 14.00 (GBP) / $17.93 (USD).


Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 3 0 3.6000 Outperform 2019-1-9

Current Price: 14.91 USD

Analyst Consensus
GBP Millions 2019 2020 2021
Mean EPS 1.26 1.29 1.36
# EPS Analysts 4 4 2
Mean Revenue 23,319.70 23,253.30 23,008.50
# Revenue Analysts 3 3 2
Mean Target Price 14.00
Mean Cash Flow 2.74 2.82 2.97
Mean EBITDA 7,351.30 7,405.40 7,447.70
Mean Net Income 2,475.30 2,582.70 2,651.80
Mean Debt Outstanding 10,986.00 12,513.60 12,735.40
Mean Tax Rate
Mean Growth Rate 4.62
Mean Capital Expenditure 3,705.50 4,176.60 3,884.30

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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