TELUS Stock Falls 22% in 3 Months as Investors Weigh a Risky Reset

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 also competes across wireless and Internet services in Canada. Rogers Communications Inc. RCI 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.

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.

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