TPG Telecom (TPG.AX)

Communications · ASX · Australia

A$3.56-2.60% today

Fundamentals

Market capA$7.13B

P/E ratio121.0

Dividend yield4.96%

Revenue growth (YoY)+3.8%

Profit margin9.1%

Return on equity0.5%

52-week rangeA$3.50 to A$5.85

Valuation and ratings

DCF fair valueA$4.44

Upside to fair value+24.9%

Analyst target (mean)A$4.11

Analyst rangeA$3.40 to A$4.70

Analysts covering12

Consensus viewbuy

Moat score44/100

Overall rating52/100, Hold

TPG Telecom trades at A$3.56, which is 25% below the A$4.44 our discounted cash flow model puts on the business. On that measure alone it screens as undervalued, though a DCF is an argument rather than a measurement, and the market is frequently right about why something is cheap.

Our moat model scores it 44 out of 100, which is little in the way of a moat. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.

It changes hands at 121.0 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.

About TPG Telecom

TPG Telecom Limited provides telecommunications services to consumer, business, enterprise, and government and wholesale customers in Australia. It also sells mobile handsets, mobile accessory, and fixed modem devices. In addition, the company owns and operates the Vodafone mobile network products. It serves residential and small office/home office customers. It serves its services under the Vodafone, TPG, iiNet, Internode, Lebara, and felix brand names. The company was formerly known as Vodafone Hutchison Australia Limited and changed its name to TPG Telecom Limited in June 2020. TPG Telecom Limited was founded in 1986 and is based in Barangaroo, Australia.

Industry: Telecom ServicesEmployees: 2,745HQ: Australia

TPG.AX passes 4 of our 30 screens today

Each screen prints the exact criteria it used, and the circumstances in which it is wrong.

Undervalued on cash flow

Companies trading at least 25% below what our discounted cash flow model says the future cash is worth today.

Dividend powerhouses

Yields above 3%, filtered for the one thing yield screens never check: whether the company can actually afford it.

Low volatility defensives

Companies that move less than the market and pay you to wait. The holdings that let you sleep, and let you hold everything else.

Dividend aristocrats

Companies with long, unbroken records of raising their dividend. The record is the point: it is evidence, not a promise.

Common questions

Is TPG Telecom (TPG.AX) undervalued?

Against our discounted cash flow estimate of A$4.44, TPG.AX at A$3.56 is 25% below fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.

What is TPG.AX's P/E ratio?

TPG.AX trades at 121.0 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.

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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.