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TELUS Stock Falls 22% in 3 Months as Investors Weigh a Risky Reset
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Key Takeaways
TELUS shares fell 22% in three months as earnings, cash flow and operating expectations reset lower.
TU cut 2026 service revenue, EBITDA and free cash flow guidance while raising capital spending.
TELUS Digital revenue fell 10%, while leverage stands at 3.5 times and valuation nears a five-year low.
TELUS Corporation (TU - Free Report) shares have fallen 22% in the past three months as investors absorb a sharp reset in earnings, cash flow and operating expectations. The pullback has pushed valuation close to a five-year low, but the operating picture remains unsettled.
The investment question is whether a cheaper multiple compensates for weaker near-term fundamentals. TELUS still has resilient connectivity and health assets, yet estimate pressure, leverage and digital disruption keep the recovery dependent on execution.
TELUS Earnings Reset Deepens the Near-Term Pressure
TELUS reported second-quarter 2026 adjusted earnings of C$0.16 per share, down 27% year over year. Operating revenues and other income declined 3% to C$4,929 million, while consolidated adjusted EBITDA decreased 2% to C$1,777 million.
Cost reductions helped adjusted EBITDA margin improve 30 basis points to 36.0%, but they did not fully offset softer revenues. Mobile phone net additions slowed to 17,000 from 55,000 a year earlier, while churn edged up to 1.08%. BCE Inc. (BCE - Free Report) also competes across wireless and Internet services in Canada. Rogers Communications Inc. (RCI - Free Report) operates in wireless and high-speed Internet, keeping pricing and subscriber trends central to the industry backdrop.
TU Guidance Cuts Cloud the Cash Flow Recovery
TELUS now expects 2026 consolidated service revenue to range from flat to a 2% decline and adjusted EBITDA to fall 2%-4%, reversing prior forecasts for 2%-4% growth in both measures. Capital expenditure guidance also increased to about C$2.6 billion from C$2.3 billion.
TELUS Corporation Price, Consensus and EPS Surprise
Free cash flow guidance was reduced to about C$1.8 billion from C$2.45 billion because of lower adjusted EBITDA, higher capital spending and incremental restructuring cash costs.
TELUS Digital Erosion Adds Execution Risk
TELUS Digital external revenues fell 10% in the second quarter, while adjusted EBITDA dropped 20% to C$72 million. The weakness reflected client ramp-downs in trust and safety and AI and data solutions, along with an unfavorable currency impact and a prior-year contractual receipt.
TELUS recorded a C$2.1 billion noncash impairment tied to the segment. Management expects second-half 2026 Digital results to be weaker than the first half as it rebuilds commercial coverage and rightsizes costs, while the 2026 restructuring and other cost assumption has risen to about C$900 million.
TU Valuation Near a Five-Year Low Tests the Opportunity
TU trades at 7.42X trailing 12-month EV/EBITDA, compared with a five-year median of 8.66X and a five-year low of 7.39X. The stock is also down 40.1% in the past year, extending the weak price trend.
The discount could become more attractive if cash flow stabilizes and deleveraging advances. For now, net debt to adjusted EBITDA stands at 3.5 times, while TELUS targets about 3.0 times or lower by year-end 2028. That leaves valuation support tied closely to operating improvement.
TELUS Signals Favor Value Over Momentum
The 22% three-month decline has made TELUS cheaper, but the reset in guidance and Digital weakness argue against treating valuation alone as a recovery signal. The balance between lower multiples and weaker near-term fundamentals remains the central issue.
TU currently carries a Zacks Rank #4 (Sell). It has a Value Score of B, Growth Score of C, Momentum Score of F and VGM Score of C.
View the Zacks #1 Rank List
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TELUS Stock Falls 22% in 3 Months as Investors Weigh a Risky Reset
Key Takeaways
TELUS Corporation (TU - Free Report) shares have fallen 22% in the past three months as investors absorb a sharp reset in earnings, cash flow and operating expectations. The pullback has pushed valuation close to a five-year low, but the operating picture remains unsettled.
The investment question is whether a cheaper multiple compensates for weaker near-term fundamentals. TELUS still has resilient connectivity and health assets, yet estimate pressure, leverage and digital disruption keep the recovery dependent on execution.
TELUS Earnings Reset Deepens the Near-Term Pressure
TELUS reported second-quarter 2026 adjusted earnings of C$0.16 per share, down 27% year over year. Operating revenues and other income declined 3% to C$4,929 million, while consolidated adjusted EBITDA decreased 2% to C$1,777 million.
Cost reductions helped adjusted EBITDA margin improve 30 basis points to 36.0%, but they did not fully offset softer revenues. Mobile phone net additions slowed to 17,000 from 55,000 a year earlier, while churn edged up to 1.08%. BCE Inc. (BCE - Free Report) also competes across wireless and Internet services in Canada. Rogers Communications Inc. (RCI - Free Report) operates in wireless and high-speed Internet, keeping pricing and subscriber trends central to the industry backdrop.
TU Guidance Cuts Cloud the Cash Flow Recovery
TELUS now expects 2026 consolidated service revenue to range from flat to a 2% decline and adjusted EBITDA to fall 2%-4%, reversing prior forecasts for 2%-4% growth in both measures. Capital expenditure guidance also increased to about C$2.6 billion from C$2.3 billion.
TELUS Corporation Price, Consensus and EPS Surprise
TELUS Corporation price-consensus-eps-surprise-chart | TELUS Corporation Quote
Free cash flow guidance was reduced to about C$1.8 billion from C$2.45 billion because of lower adjusted EBITDA, higher capital spending and incremental restructuring cash costs.
TELUS Digital Erosion Adds Execution Risk
TELUS Digital external revenues fell 10% in the second quarter, while adjusted EBITDA dropped 20% to C$72 million. The weakness reflected client ramp-downs in trust and safety and AI and data solutions, along with an unfavorable currency impact and a prior-year contractual receipt.
TELUS recorded a C$2.1 billion noncash impairment tied to the segment. Management expects second-half 2026 Digital results to be weaker than the first half as it rebuilds commercial coverage and rightsizes costs, while the 2026 restructuring and other cost assumption has risen to about C$900 million.
TU Valuation Near a Five-Year Low Tests the Opportunity
TU trades at 7.42X trailing 12-month EV/EBITDA, compared with a five-year median of 8.66X and a five-year low of 7.39X. The stock is also down 40.1% in the past year, extending the weak price trend.
The discount could become more attractive if cash flow stabilizes and deleveraging advances. For now, net debt to adjusted EBITDA stands at 3.5 times, while TELUS targets about 3.0 times or lower by year-end 2028. That leaves valuation support tied closely to operating improvement.
TELUS Signals Favor Value Over Momentum
The 22% three-month decline has made TELUS cheaper, but the reset in guidance and Digital weakness argue against treating valuation alone as a recovery signal. The balance between lower multiples and weaker near-term fundamentals remains the central issue.
TU currently carries a Zacks Rank #4 (Sell). It has a Value Score of B, Growth Score of C, Momentum Score of F and VGM Score of C.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.