Is the languishing BT share price a bargain right now?

BT share price has gained by almost 6% in the past five days after reports that Saudi Arabia’s sovereign wealth fund had invested billions in the company. The kingdom now owns about 5% of the biggest telecom company in the UK. Still, the company’s share price is still languishing near the lowest level since the past financial crisis. The BT stock price has dropped by 40.7% this year and by 74% in the past five years.

BT has been a troubled company

“Is BT shares a good buy now?” This is a common question among many people who are looking for bargains. And the firm is a real bargain considering that it has a PE ratio of less than 5. Its peers in the United States such as AT&T and Comcast have a PE ratio of more than 10. This means that, from a fundamental perspective, BT is a relatively cheap company.

But BT stock price is low for a reason. The company is still going through the fallout of the accounting scandal in the Italian unit that was revealed three years ago. Also, the company recently suspended its dividends and buybacks. Also, it is still going through the fallout of its massive job cuts that were announced recently. Most importantly, the firm’s revenue has been falling while costs have been rising. For example, in the most recent results, the firm announced that it made £11.38 billion and £1.07 billion in net income, which was an underperformance.

Still, many investors may be attracted to BT stock price for several reasons. First, it is slashing its costs. For example, it expects to save billions by conducting the large layoffs and by encouraging more workers to work from home. It is achieving this by closing 90% of its offices. Second, the firm has a domineering position in the telecommunication industry in the UK.

Third, its financials are in a better shape, with current assets of about £10.20 billion and current liabilities of £12.75 billion. Finally, as mentioned above, BT share price is likely undervalued because of investors fears about its shape. With business activity and sports returning, we could see the firm’s shares continue to grow.

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BT share price analysis

BT stock price is trading at 121.80p, which is 25% above this year’s low of £97.60. On the daily chart, the price is slightly below the 23.6% Fibonacci retracement level. Most importantly, the price has moved above the 50-day exponential moving average. It is also above the ascending trend line. This means that bulls may be energized by the latest move by the Saudis and push BT share price higher. If this happens, the price will move to test the previous high at 128.40.

On the flip side, a move below 110.70 will invalidate the bull thesis. This price is at the lowest it has been since June 12.

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