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BT's shares have gained a very healthy 25% during the course of 2012 compared with a 6% rise for the Footsie. As you might expect from the uplift in BT's shares, newsflow during the course of 2012 has been good.
In March, BT told us how it was going to deal with its 4 billion pounds pension deficit. The company said it would make an immediate 2 billion pounds lump-sum payment, followed by nine yearly payments of 325 million pounds from March 2013 to March 2021. The market liked the news.
In June, BT announced it had secured live rights to a quarter of the football Premier League matches -- half of the "best" matches according to the chief executive -- to be shown in the 2013-14 and 2014-15 seasons. This was followed in September by the announcement of a live rights deal with Premiership Rugby over a four-year period. The sports deals look like a good move as consumers increasingly want to buy their broadband and entertainment services from a single provider.
In its half-year results announced in November, BT said it would again be accelerating the roll-out of its high-speed fibre-optic network. The company now expects fibre to be available to two-thirds of U.K. premises by the spring of 2014, more than 18 months ahead of the original schedule.
In the same month, BT launched the world's first ever trial of a 10Gbps "hyper-fast" broadband network in a live working environment. While there are no current plans to deploy the technology, the company says it demonstrates its determination to be at the cutting edge of developments in the coming decades.
Among the good news of 2012, there was a negative in the shape of the performance of BT's Global Services division, which was "affected by the tough conditions in Europe and the financial services sector." However, the group announced the appointment of a new CEO for the division from 1 October, so performance in this department in 2013 is something shareholders should keep an eye on.
Overall, BT has made good progress in 2012 but, after the strong rise in the share price, how does the valuation look now and have the shares got further to go in 2013?
At a recent price of 238 pence, BT is on a modest price-to-earnings (P/E) ratio of 9.5 for the year to March 2013. The P/E is also 9.5 for the following year, if analyst forecasts of flat revenue and earnings prove accurate. Meanwhile, the dividend is forecast to advance, giving a yield that rises from 4% to 4.5%, more than twice covered by earnings.
BT's rating looks reasonably attractive, but with the uninspiring analyst forecasts through to March 2014, newsflow would need to very good indeed in 2013 for the company's shares to come close to reproducing the gain of 2012.
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