BT Group (LSE: BT.A) shares have been having a great time, with the price already up 20% in 2026. And we’re looking at a doubling since then.

These are welcome moves for long-suffering BT shareholders, who’ve seen their shares play out a painful decade. So are we looking at a new golden era for profit gains?

Well, analysts do expect BT’s annual earnings per share to climb 45% by 2028. But they’re split 50/50 on whether the shares are a Buy or a Sell. Why is that? I see a number of possible reasons.

Another down cycle?

The share price gain of the past few years has pushed BT’s price-to-earnings (P/E) ratio up close to 17 now. That might be fine for a company with high-tech growth prospects. But at the same time, BT’s business is highly capital intensive.

In the first half of the current year, we saw an 11% fall in profit before tax. But at the same time, capital expenditure (capex) rose 8% to £2.4bn. The higher capex also knocked a fair old chunk off free cash flow, with a normalised figure down 43%.

BT also isn’t quite the dividend monster we’re used to, at least not in dividend yield terms. With the BT share price so strong, we’re looking at a forecast yield of only 3.8%. That’s about average for the FTSE 100 this year. But dividend investors — who’ve long made up a high proportion of BT shareholders — could do significantly better elsewhere.

BT shares have, for decades, been lurching between bright and gloomy spells. Could we be in for a new downwards cycle? It looks like half the forecasting analysts think so.

The real value?

The P/E can be a bit misleading too, with BT’s net debt appearing interminably stuck around £20bn. The cost of servicing it doesn’t seem so onerous, so it might be just fine. But if we adjust to allow for debt, we nearly double the effective P/E for the business to 32. On that basis, BT shares are more expensive than AI chip leader Nvidia!

Do I sound totally negative about BT? I’m actually not, I’m cautiously optimistic. My reason is summed up by something CEO Allison Kirkby said with February’s Q3 update: “We remain on track for our financial outlook and guidance metrics for this year, our cash flow inflection to c.£2.0bn next year, and to c.£3.0bn by the end of the decade.“

Big debts and a high P/E valuation? Those might not matter much if BT can reach such impressive cash flow levels. The end-of-decade target is a full 80% above the £1.65bn recorded in 2025. I’ll definitely have my eyes focused on cash when we see 2026 FY results on 21 May.

Bottom line

So what’s my verdict? I confess I’m a bit torn. And it looks to me like we’re in a bit of a wait-and-see phase for BT shares. I could see BT as a potential long-term buy. But right now, I think investors should consider looking for clearer value elsewhere.