Despite a grim 2023, STC stock remains very popular among Saudia investors and top-performing international funds. While you can buy STC shares directly, sometimes it is worth considering an ETF with Saudi Telecom representation.
Saudi Telecom Company (STC) has been focused in recent years on expanding its operations and investing in new technologies, such as 5G networks, to meet the growing demand for high-speed internet and digital services. As a result, the company has been able to maintain its position as a leading player in the Saudi Arabian telecommunications industry and is well-positioned for future growth.
STC's shares are listed on the Saudi Stock Exchange (Tadawul) under the ticker symbol "7010" and are widely held by a diverse range of investors, including both domestic and international institutional investors, as well as individual investors. The company's shares have also been included in various global indices and exchange-traded funds (ETFs), such as the iShares MSCI Saudi Arabia ETF (KSA).
STC Stock (Tadawul:7010) - Research and Ratings
- Is Saudi Telecom stock undervalued compared to its fair value, analyst forecasts, and its price relative to the market?
- What is the analyst's 12-month STC share price forecast?
- What are Saudi Telecom’s future growth expectations?
- How has STC stock performed over the past 5 years?
- Should you buy Telecom shares or invest in ETFs with "7010" representation?
Understanding STC Stock: A brief history
Established in 1998 and headquartered in Riyadh, Saudi Telecom Company, together with its subsidiaries, provides telecommunications, information, media, and digital payment services in the Kingdom of Saudi Arabia and internationally.
We can divide Saudi Telecom Company (STC) growth into those segments historically:
- Fixed-line services: When STC was first established in 1998, it held a monopoly on all fixed-line telecommunications services in Saudi Arabia. These services included voice calls, fax, and data transmission over copper wires.
- Mobile services: STC launched its mobile services in 1999, becoming the first operator to offer mobile telecommunications in Saudi Arabia. The company initially offered 2G services and later upgraded to 3G and 4G technologies. and now 5G technologies.
- Broadband services: With the increasing demand for high-speed internet, STC began offering broadband services to its customers. The company provides various broadband packages, including ADSL, fiber-optic, and wireless internet services.
- Enterprise services: STC offers a range of services tailored to meet the needs of businesses and government organizations, including voice and data services, cloud computing, managed services, and cybersecurity solutions.
- International operations: In addition to its operations in Saudi Arabia, STC has expanded its presence globally by acquiring stakes in telecommunications companies in other countries. The company has operations in Kuwait, Bahrain, Malaysia, Turkey, South Africa, and India.
- Digital services: STC has invested heavily in developing digital services, such as e-commerce, digital advertising, and mobile applications. These services are aimed at providing customers with innovative and convenient ways to access services and products.
Over the years, STC has continuously adapted to changes in the market and introduced new services to meet the evolving needs of its customers. The company's focus on innovation and customer satisfaction has helped it maintain its position as one of the leading telecommunications providers in the region.
STC shares are distributed among 3 categories:
- Sovereign Wealth Funds: 64.2%
- General Public: 31.2%
- Institutions: 4.54%
- Individual Insiders: 0.00839%
The top 25 shareholders own 68.37% of the company, while the top 5 shareholders are:
- The Public Investment Fund of The Kingdom of Saudi Arabia: 64.2%
- The Vanguard Group, Inc: 1.47%
- BlackRock, Inc: 1.21%
- Geode Capital Management, LLC: 0.36%
- Dimensional Fund Advisors LP: 0.23%
STC Stock (Tadawul:7010) - Fundamental Analysis and Financial Ratings
See the latest STC stock price analysis, including valuation, future growth, past performance, and more to help you make more informed investing decisions.
Valuation
Is STC Stock (Tadawul:7010) undervalued compared to its fair value, analyst forecasts, and price relative to the market?
- STC stocks are good value based on its Price-To-Earnings Ratio (14.00x) compared to the peer average (15.9x).
- STC stocks are expensive based on its Price-To-Earnings Ratio (14.00x) compared to the Asian Telecom industry average (15.4x)
- STC stocks are good value based on its Price-To-Earnings Ratio (14.00x) compared to the estimated Fair Price-To-Earnings Ratio (14.2x).
- STC stocks are trading at (SAR 37.4), which is below analysts' estimate of fair value (SAR40.12).
Future Growth
Saudi Telecom is forecast to grow earnings and revenue by 4.8% and 5.8% per annum respectively. EPS is expected to grow by 4.5% per annum. Return on equity is forecast to be 16.9% in 3 years.
- Saudi Telecom's forecast earnings growth (4.8% per year) is below the savings rate (14.3%).
- Saudi Telecom's earnings (4.8% per year) are forecast to grow faster than the Saudi market (6% per year).
- Saudi Telecom's earnings are forecast to grow, but not significantly.
- Saudi Telecom's revenue (5.8% per year) is forecast to grow faster than the SA market (0.4% per year).
Past Performance
How has STC Stock performed over the past 5 years?
- Saudi Telecom's earnings have grown by 3.9% per year over the past 5 years.
- Saudi Telecom's earnings growth over the past year (9.2%) exceeds its 5-year average (3.9% per year).
- Saudi Telecom's earnings growth over the past year (9.2%) exceeded the Telecom industry's 8.1%.
Financial Health
How is Saudi Telecom's financial position?
- STC's short-term assets (SAR71.2B) exceed its short-term liabilities (SAR48.1B).
- STC's short-term assets (SAR71.2B) exceed its long-term liabilities (SAR30.1B).
- STC has more cash than its total debt.
- STC's debt-to-equity ratio has increased from 6.4% to 30.3% over the past 5 years.
- STC's debt is well covered by operating cash flow (90.9%).
- STC earns more interest than it pays, so coverage of interest payments is not a concern.
Dividend
“Tadawul:7010” is a dividend-paying company with a current yield of 4.28% that is well covered by earnings.
- STC's dividends per share have been stable in the past 10 years.
- STC's dividend payments have increased over the past 10 years.
- Tadawul:7010's dividend (4.28%) is higher than the bottom 25% of dividend payers in the Saudi market (1.56%).
- STC's dividend (4.28%) is low compared to the top 25% of dividend payers in the Saudi market (4.59%).
STC Stock Price Forecast
What is the analyst 12-month STC stock price forecast, and do we have any statistical confidence in the consensus price target from analysts?
According to simplywall.st, the STC stock (Tadawul:7010) 12-month target price is less than 20% higher than the current share price.
Wallet investor site suggests that the price of STC stock will drop in 2024 compared to the current price, ending the year at an average price of 10.239 SAR.
There are no 5-year STC stock price forecasts and price predictions.
Important: When considering Telecom's fundamental analysis, financial rating and price predictions, it’s important to remember that high market volatility and changing economic environment makes it difficult to give long-term estimates. As such, analysts and algorithm-based platforms can and do get their ratings and predictions wrong. Always do your own research before making an investment decision. And never trade or invest more than you can afford to lose.
STC Stock - Technical Analysis
Based on the weekly chart, the price of Saudi Telecom STC shares has been in a downtrend since reaching its peak in May 2023 at 45.90 Saudi riyals.
The chart above illustrates the completion of the double tops pattern, which led to the price trading below both the 50-day and 100-day closing moving averages. Should the weekly candle close below the psychological support level at 37.40 Saudi riyals, it may open the door for bearish sentiment to drive further selling activity, potentially pushing the price down to 34.70 Saudi riyals.
How to Invest in STC Stock (Tadawul:7010)
Some investors want to take an active hand in managing their investments, while others prefer to set it and forget it. Your preference may change but decide on an approach to get started.
For most people, stock market investing means choosing among these two investment types:
Individual STC shares
If you’re after a specific company, you can buy a single share or a few shares to dip your toe into the stock-trading waters. Building a diversified portfolio out of many individual stocks is possible, but it takes significant investment and research.
If you go this route, remember that individual stocks will have ups and downs. If you research a company and choose to invest in it, think about why you picked that company in the first place if jitters start to set in on a down day.
Traditional stockbrokers allow you to invest in local stocks. However, you might not be able to invest in international stocks listed on the major stock exchanges, global ETFs, and other assets.
ETFs with STC holdings
Al Rajhi stock (or any single stock, for that matter) can be a very volatile investment. You can manage the risk you see extreme highs and lows by diversifying your investment holdings. An ETF, for instance, contains a basket of individual stocks. When you invest in a fund, you also own small pieces of each of those companies.
If you want an ETF with SNP representation, you might consider iShares MSCI Saudi Arabia ETF. BlackRock's iShares is the largest provider of ETFs as calculated by assets under management.
The fund can be suitable for Arab and foreign investors who want liquid and diversified exposure to the top 10 companies listed on the Saudi Stock Exchange:
Why invest in STC Stock via KSA?
The iShares MSCI Saudi Arabia ETF seeks to track the investment results of a broad-based index composed of Saudi Arabian equities. With net assets of almost $1B, The iShares MSCI Saudi Arabia ETF (KSA) is the largest exchange-traded fund that seeks to track the investment results of an index composed primarily of frontier market equities along with select emerging market equities.
- Access to the Saudi Arabian stock market, which has historically been closed to foreign investors.
- Targeted exposure to a country with growth potential. with one-click access to a virtually untapped investment portfolio, including Saudi Stock Exchange and TASI index exposure.
- Use to seek long-term growth and diversification.
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Sources:
Saudi Telecom Company (SASE:7010) Stock Valuation - Simply Wall St
Saudi Telecom Company (7010.SR) Stock Price, News, Quote & History - Yahoo Finance