A financially strong company, Turkcell has $2.7 billion in cash and only $1.8 billion in debt. It sports a low debt-to-equity ratio of 31.5%, especially when compared to other large carriers, such as Verizon's
Turkcell has strong cash flows, with operating cash flow at $1.25 billion over the last 12 months. Some of its cash goes to paying shareholders a dividend, which currently yields 3.9%. Turkcell reinvests its remaining cash flow to enhance and expand its network in Turkey and in emerging markets such as Ukraine, Kazakhstan, Azerbaijan, Georgia, and Moldova.
With such large capital expenditures, the company's price-to-free-cash-flow ratio of 46 looks horrendous. However, if the company were to stop growing its network, the ratio would be much closer to its P/E ratio of 14. For a company which analysts expect to grow 11% this year, this stock is cheap.
Emerging market, strong brand name, and excellent service. Just returned from Istanbul and they appear to have a dominant position. I suspect strong growth on the data side.
Turkcell is a strong competitor in the growing telecom sector of Turkey and emerging Eastern European markets. It is one of the few Turkish companies listed in the United States. If you want more exposure to the fast-growing economy of Turkey, there is also the iShares MSCI Turkey Investable Market Index ETF
True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.
Dan Dzombak is constantly on the lookout for mechanical stocks. Turkcell is a Motley Fool Global Gains and Motley Fool Income Investor recommendation. The Motley Fool disclosure policy is mechanical in its application.
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