After years of woe, the BT (LSE: BT.A) share price lastly placed on a present final month. It ended Might 25.76% increased than it started the month, which is sort of a turnaround. On the FTSE 100, solely a resurgent Hargreaves Lansdown did higher.

Lengthy-term buyers will nonetheless be hurting although. Over one 12 months, BT shares are nonetheless down 11.07%. Over 5 years, they’re down 32.6%. And that’s after considering the current bounce.

The BT leap is a good commercial for getting oversold FTSE 100 shares, which is precisely what I love to do. Sadly, it isn’t straightforward. Loads of buyers may have snatched at this falling knife lately, and regretted it. Now there’s one other hazard. Is that this only a so-called lifeless cat bounce?

Beating the FTSE 100

BT shares jumped on a surprisingly upbeat set of outcomes. Properly, upbeat by its requirements. Annual earnings truly dropped 31%. Nevertheless, buyers selected to look previous that and have fun CEO Allison Kirkby’s declare that the group had hit an “inflection point”, as capital expenditure on its full fibre broadband programme lastly peaked. BT additionally hit its £3bn value financial savings goal a 12 months early and plans one other £3bn of financial savings by 2029. 

Inevitably, I’ll need to pay extra to purchase BT shares right now. Once I final thought-about them, a month or two in the past, they seemed dust low-cost buying and selling at simply 6.75 occasions forecast earnings That’s now climbed to 12.8 occasions.

On the identical time, the forecast yield has fallen from 7.36% to five.94%. That’s nonetheless comfortably above the FTSE 100 common of round 3.8%, however not so good as it was. As a comfort, it’s forecast to climb to six.24% in 2024.

Excessive dividend revenue forward

Shareholder payouts look safer although, with free money circulate set to double from £1.5bn this 12 months to £3bn by 2030. Kirkby was assured sufficient to hike the 2023 dividend 3.9%. With BT over its money circulate hunch, I’m hoping for extra.

I’m all the time cautious of shopping for after a brief, sharp inventory spike like this one. Fairly a couple of worth shares in my portfolio jumped on a constructive set of outcomes over the spring, together with wealth supervisor M&G and Phoenix Group Holdings. Gravity rapidly exerted itself. Buyers financial institution earnings, consideration wanders, expectations retreat, shares revert to the imply. It occurs.

BT nonetheless has main underlying issues, together with a top-heavy pension scheme and £20bn internet debt. It’s additionally working in a extremely aggressive market. One constructive set of outcomes doesn’t wipe the slate clear.

The funding case has undeniably improved, however as a price seeker I believe it’s a bit dangerous to purchase BT shares within the afterglow of Might’s outcomes. If the joy ebbs, that’s after I’ll swoop. Whereas I sit tight, I can see a lot extra nice worth FTSE 100 shares to amuse me.