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TELUS (TSX:T) Could Be 18% Undervalued As Dividend Cut Resets Guidance

Simply Wall St · 2d ago

Dividend cut and guidance reset put TELUS in focus

TELUS (TSX:T) is back on investors’ radar after a larger than expected dividend cut and reduced financial guidance under new CEO Victor Dodig. This shift has prompted fresh institutional interest.

See our latest analysis for TELUS.

TELUS shares trade at CA$13.54 after a sharp reset in expectations, with the 30 day share price return down 8% and the year to date share price return down 25%. The 1 year total shareholder return has declined 35%, suggesting momentum has been weak as investors reassess the dividend cut and new guidance.

If the TELUS reset has you reassessing your watchlist, this could be a good moment to widen your search and check out 3 top founder-led companies

With TELUS now reset after the dividend cut and guidance change, some investors see a fresh entry point, while others prefer to wait for clearer progress. How does the current valuation compare with that caution?

Most Popular TELUS Narrative: 17.9% Undervalued

At CA$13.54, TELUS is priced below the most widely followed fair value estimate of CA$16.50, which frames the current reset as a valuation gap rather than a finished story.

Sustained investment in network modernization, with a $2B commitment to expand broadband in key markets and asset monetization through the Terrion tower partnership, is expected to support incremental returns, operational efficiencies, and deleveraging, with the aim of improving free cash flow and net margin expansion as capital intensity moderates.

Read the complete narrative.

Want to see how this TELUS playbook is expected to translate into cash flows and valuation? The narrative is based on modest revenue growth, rising margins and a richer future earnings multiple to justify that fair value.

Result: Fair Value of CA$16.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, TELUS still faces pressure from high ongoing capital needs and a sizeable debt load, while regulatory changes could weigh on its pricing power and margins.

Find out about the key risks to this TELUS narrative.

Next Steps

With sentiment around TELUS split between concern and cautious optimism, it makes sense to review the numbers yourself and decide how credible the reset story feels. To see both sides of that debate in one place, take a closer look at the 3 key rewards and 2 important warning signs

Looking for more TELUS style investment ideas?

If TELUS has you rethinking where the best opportunities might be, do not stop here. Use the Simply Wall Street Screener to spot ideas you might otherwise miss.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.