TELUS (TSX:T) Stock Faces Leverage Questions After Q3 Results

TELUS closed today at CA$12.81, capping a choppy few months where the stock gained about 13% over 30 days but is still down over the past quarter. Traders responded to the Q3 2026 release with that short term relief; yet the headline story is tougher. The telecom group posted a quarterly net loss of CA$667 million and basic earnings per share of a CA$0.42 loss, while trailing 12 month losses and interest coverage pressures keep the balance sheet strain front and centre for anyone thinking beyond the next few sessions.

Concerned that TELUS is wrestling with losses and balance sheet pressure even after a short term bounce? See how it stacks up against companies in our list of solid balance sheet and fundamentals stocks (5 results).

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs. Q3 2025): CA$5,026 million vs. CA$5,067 million (broadly flat; slight decline)
• Net Income or Loss (Q3 2026 vs. Q3 2025): loss of CA$667 million vs. profit of CA$493 million (moved from profit to loss)
• Basic EPS (Q3 2026 vs. Q3 2025): loss of CA$0.42 per share vs. earnings of CA$0.32 per share (shifted from earnings to loss)
• Trailing 12 Month Net Income (Q3 2026 vs. Q3 2025): loss of CA$2,079 million vs. profit of CA$1,179 million (reversed from profit to sizeable loss over the year)

Earnings paint one picture, but investors who care about what TELUS is worth often focus on the cash that actually comes in and out of the business. Reported profits can move with non cash items, while underlying cash generation can provide a steadier view.

On TELUS' own numbers, if you look at cash flows rather than current losses, the stock could be a clear 30% undervalued.

Evaluating TELUS’s Turnaround Targets Against Q3 Reality

"The main thing that has to go right is TELUS delivering on its plan to cut leverage toward 3x by 2028 through disciplined capital spending, cost savings and monetization of selected health, digital and real estate assets, while keeping the core telecom business resilient."

TELUS is at least putting building blocks in place for that plan. Management reaffirmed the 2026 outlook and is running a transformation that targets about CA$900m in annualized cash savings by end 2028. Asset reviews across TELUS Health and Agriculture & Consumer Goods are active, with proceeds flagged for debt reduction. Leverage still sits above the 3x goal, so this quarter marks early groundwork rather than a completed milestone.

That disagreement has a full argument behind it. → Uncover the higher Fair Value this Narrative argues for.

Bear Case On TELUS Leverage Looks Largely Intact

The cautious view centers on TELUS being stuck with heavy spending and slow earnings repair while newer units ramp too slowly.

"While TELUS Health and Agriculture are framed as scalable, lower capex platforms with potential for external investment, weaker group guidance for 2026 service revenue, adjusted EBITDA and free cash flow suggests that contributions from these units may not be sufficient in the near term to offset softness elsewhere."

Q3 supports that concern. Management kept 2026 guidance unchanged, including an expected 2% to 4% adjusted EBITDA decline and higher 2026 capex of about CA$2.6b. The reaffirmed leverage target of 3x net debt to EBITDA by end 2028, combined with a quarterly net loss and dividend held at the reset level, shows the earnings gap has not yet closed.

Hunt Beyond TELUS Headlines

TELUS just reminded investors how complex a multi year reset can appear in reported results. The real opportunity could sit in companies where business momentum and market pricing remain out of sync.

• Company 1 - 29% below our estimate - uses quick payback U.S. store openings and a fast growing digital channel to compound reach and sales.
• Company 2 - 41% below our estimate - ties lean, flexible inventory buying to rising online penetration to keep assortments fresh and store productivity high.
• Company 3 - 49% below our estimate - channels strong recent cash generation into near mine projects that extend production life at existing processing hubs.

That is three of the list. See all 6 potentially undervalued companies →

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