The last four weeks will have left shareholders of BT (LSE: BT.A) happy as the share price rose by 20% — placing the stock as a standout performer in the FTSE 100 for this period. Having experienced a steady decline in recent times, could this jump be the momentum the BT share price needed? And as such, should I be buying shares? Let’s take a look.
BT share price history
Let me start by providing some context. Formerly state-owned, the first stage of privatisation occurred in 1984 when the BT share price was listed for 130p a share. By the end of the century, the stock was pushing the 1,000p mark. Since then, however, the firm’s shares have experienced a steady decline. Five years ago, they were trading for nearly 360p. Today, they’re half of that.
Yet the last 12 months have provided some cheer for BT investors. Up over 28% within this period, the BT share price at times has risen above the 200p threshold – a large increase on its 52-week low of 116p (back in November last year). These gains were short-lived but, as my colleague Rupert Hargreaves analysed, there’s certainly potential to see the share price rise above the 200p threshold once again.
Would I buy?
Early November saw the release of the firm’s half-year results — through to the end of September — and there were plenty of positives to take away. One of these was the reinstatement of dividends. Abandoned back in 2020 due to multiple reasons (one, of course, being the pandemic), the firm has resumed cash payouts to investors – set at 2.31p for now. This is good news and is a positive sign for a potential investor like me.
The firm also showed it’s making positive strides for the future. BT said it had achieved £1bn in annual savings, 18 months earlier than expected. As such, it has brought forward its FY25 target of £2bn in annualised savings by a year. The group’s capital expenditure for FY23 has also been reduced by £200m to £4.8bn. These are all positive factors for me when considering adding BT shares to my portfolio.
However, I do have some concerns. Revenue for the period came in slightly down, having dropped 3% to just over £10bn. Pre-tax profits were also down 5%, while net debt rose by £614m – with it now sitting at £18.2bn. While this is understandable as the firm continues to invest in its fibre broadband network, these do dampen my optimism.
I think BT has plenty of potential and its continuous expansion should reap benefits in years to come. The half-year results provided shareholders and spectators with optimism and the reinstatement of dividends is clearly positive news. The fact that BT has been able to push forward targets shows the progress the firm is already making. While the rising debt is an issue, I think for the current price of 160p, BT presents itself as a good opportunity. I would buy some shares.
Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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