It appeared just like the BT Group (LSE: BT.A) share price was by no means going to cease falling.

However FY outcomes launched on 16 Might modified that. And BT shares have spiked up 30% for the reason that begin of the month.

Key milestones

BT mentioned it handed the purpose of peak capital expenditure on its fibre broadband rollout. It additionally reached £3bn price financial savings a yr forward of plan.

CEO Allison Kirkby mentioned the agency is on “a path to greater than double our normalised free money stream over the following 5 years“. Oh, and the dividend has been lifted once more.

I feel this boosts the outlook for these of us who feared BT’s rising debt, whereas it was spending rising quantities of money on constructing out its community.

What the Metropolis says

I have to be cautious right here. I’d by no means purchase or promote a inventory simply due to an analyst consensus. And I’d by no means decide primarily based on price targets.

Forecasts ought to at all times be handled with care. These providing their ideas on BT’s future have little extra data to go on than we do.

However, I do stand by the Silly precept of listening to all opinions on a inventory, and utilizing them to make up my very own thoughts. And there actually is a robust purchase consensus on the market now.

Bullish strikes

Traders’ Chronicle says 90% of forecasters fee BT shares as a purchase. That’s up on a yr in the past, when extra have been on the fence and had BT as a maintain.

As for the price outlook, there’s a median goal of 190p. That would imply a 48% hike for the BT share price, on prime of the positive aspects we’ve seen to date.

The vary may be very vast, although. Some bulls anticipate a good bit greater than that. However the lowest prediction suggests a 14% fall.

If we might watch the method of brokers setting their price targets, I think about we would see the air stuffed with fingers.

What it means

Forecasts put BT’s price-to-earnings (P/E) ratio at 9.3. If the share price ought to attain that concentrate on of 190p, it might push the P/E up to just about 14.

That’s near the FTSE 100 long-term common. And for a inventory with long-term progress potential, I feel it is likely to be low-cost.

However one factor hasn’t been within the headlines, and that’s BT’s debt. Internet debt at 31 March stood at £19.5bn, or about 50% greater than BT’s whole market cap. I discover that scary.

Excessive valuation

In actual fact, if I alter to account for the debt, I get an equal P/E of about 35. And I’ve ignored the £4.8bn pension fund deficit.

Taking a look at one other measure, the previous yr’s outcomes present a return on fairness (ROE) of 6.8. That’s solely about half the common for the telecoms business.

On some valuations, then, I feel BT appears to be like overpriced now.

However, a forecast dividend yield of 6.3% might make it a inventory to simply purchase and neglect. By no means thoughts the valuation, really feel the money?