The Telstra Corporation Ltd (ASX: TLS) share price continues to dwell in the doldrums. Telstra shares are going for $3.12 a share at the time of writing. At that share price, Telstra is up 3.8% year to date, but down 7.5% over the past 12 months, and down a nasty 40% over the past 5 years.
And we won't even get into the $7-something price tag Telstra's T2 tranche floated at back in 1999.
So what's going on with Telstra shares? And (perhaps more importantly), is the Telstra share price a buy today?
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Stability comes at a price
As a telco, there is a lot to like about Telstra on paper. It has an extremely robust and inelastic earnings base, given that in this modern age, customers would probably think hard about choosing between their mobile phone and internet data and almost anything else if push came to shove.
This was evidenced last year by the fact that Telstra kept its dividends steady in a year that saw dividend carnage across many of the ASX's blue-chip shares.
Speaking of dividends, the company's shareholder payouts arguably remain its crown jewel. Telstra paid out 16 cents in dividends last year, a level management has already committed to backing up again in 2021. Those consist of 10 cents in ordinary dividends. In addition, the remaining 6 cents in special dividends come from NBN-related payments.
On the current share price, that gives Telstra a forward dividend yield of 5.13%, or 7.33% grossed-up with Telstra's full franking.
However, Telstra has been struggling in recent years with the ongoing NBN rollout. In its earnings report that the company delivered last month, Telstra reported that its earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 14.7% to $4.1 billion.
Saying that, Telstra also reported that its 5G rollout is going well. It now has the largest 5G network in the country, with more than 50% of the population now covered. 75% of the population is set to be covered by June 2021. That arguably bodes well for Telstra if 5G adoption continues to accelerate (5G margins are a lot better than NBN margins for the company).
Telstra's T22 cost-cutting program is also back on track after being a COVID-necessitated pause last year. 80% of its cost-cutting metrics are now on schedule or completed.
Is the Telstra share price a buy today?
One broker who thinks the Telstra share price is a buy today is Goldman Sachs. According to CommSec, Goldman rated Telstra shares a 'buy' last month, with a price target of $4 a share. That implies an upside of more than 28% on today's share price (not even including dividends).
On the current Telstra share price, the company has a market capitalisation of $37.05 billion, and a price-to-earnings (P/E) ratio of 20.9.
