TELUS (TSX:T) Following Its Dividend Cut, Is It Cheap Or Fairly Valued
TELUS (TSX:T) is in focus after its Q2 2026 update, which combined a 55% dividend reset, a C$2.1b non cash impairment at TELUS Digital, and lower full year service revenue guidance.
See our latest analysis for TELUS.
At a share price of CA$13.38, TELUS has seen sharp selling pressure around the Q2 2026 update, with the 1 day share price return declining 11.27% and the year to date share price return down 25.63%. The 1 year total shareholder return is down 32.09%, and longer term total shareholder returns over 3 and 5 years have also been negative. This points to fading momentum as investors adjust to lower dividend income and the larger perceived risk around earnings and balance sheet strength.
If the TELUS reset has you reassessing your income and growth mix, it may be worth widening the lens and checking opportunities in resilient utilities and infrastructure through the 35 power grid technology and infrastructure stocks
Bulls see a reset TELUS at CA$13.38 as mispriced against its assets and cash flow potential. Bears see a value trap after the dividend cut and impairment. Which case does the current valuation support?
Most Popular Narrative: 34% Undervalued
TELUS is trading at CA$13.38 against a widely followed fair value estimate of CA$20.28, which frames the recent sell off as a valuation reset rather than a verdict on the long term story.
Deployment and commercialization of next-generation technologies, including AI-powered customer experience platforms, data center assets for "sovereign AI" infrastructure, and private 5G, position TELUS to create new revenue streams, lower cost-to-serve, and enhance its competitive moat, translating into higher future earnings and margin improvements.
Want to understand why this fair value sits well above today’s price? The narrative leans on steady revenue growth, fatter margins, and a premium future earnings multiple. Curious which specific growth paths and cash flow assumptions justify that kind of valuation gap?
Result: Fair Value of CA$20.28 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, TELUS still faces pressure from high capital spending and debt, as well as regulatory decisions like fee removals that could squeeze margins and delay any valuation catch up.
Find out about the key risks to this TELUS narrative.
Another View: TELUS on Earnings Multiples
While the SWS DCF model points to TELUS trading well below estimated future cash flow value, the picture looks very different when you just look at what investors are paying for current earnings. On this measure, TELUS trades on a P/E of 22.7x.
That compares to a fair ratio of 10.7x, the Global Telecom industry average of 17.4x, and a peer average of 11.2x. This higher P/E suggests investors are already paying a rich price for each dollar of current earnings, which raises the question of how much room is left if the growth story stumbles.
See what the numbers say about this price — find out in our valuation breakdown.
Next Steps
The mix of concerns and optimism around TELUS is clear, so it makes sense to review the numbers directly and decide where you stand. To get a balanced view of both sides, start with the 2 key rewards and 3 important warning signs
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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