Telstra is clearly having to run hard to grind out EPS growth. FY24 guidance reiterated, which is good, consensus for FY25 at $8.6b is within guidance of $8.4b-$8.7b, but you get the sense of how much work there is to keep ahead of cost and otherwise embedded business inefficiency.

Whilst TLS might be only just keeping its nose in the clear with regard to expectation, I think in absolute terms it’s doing pretty well. That’s not bad growth ($8.25b to $8.4-8.7b) for a large cash generative teleco with a decent yield, and I’d worried the forward EPS implied CAGR of ~8% would be too high a hurdle…

…but so far, mostly on track. I say mostly because the one obvious negative element is that guidance of $8.4b-$8.7b is a mid-point ($8.55b) that’s below $8.6b, so some slight reason to worry about the market reaction.

Equally, the stock had retraced quite a bit further than earnings, suggesting the market may have been worried about a larger miss/weaker guidance range.

Either way, we fall back to our main point that 20x for a defensive, dominant entity with a good yield and plausible runway to solid earnings growth is a good investment.

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