AT&T (T) came out with quarterly earnings of $0.52 per share, beating the Zacks Consensus Estimate of $0.46 per share. This compares to earnings of $0.54 per share a year ago.
AT&T added 283,000 fiber subscribers and 421,000 net postpaid phone subscribers in the latest quarter, reflecting a push for “convergence” of connectivity offerings.
AT&T recorded higher sales in the fiscal fourth quarter, boosted by increases in revenue at its wireless and consumer businesses.
AT&T forecast annual profit above market expectations on Wednesday, on bets that its wireless and fiber network expansion would allow the U.S. carrier to tap growing 5G and high-speed internet demand.
T launches an end-to-end IoT solution on AWS Marketplace, aiming to simplify adoption of IoT devices for small and medium sized businesses across sectors.
AT&T will report its full fiscal year results later this week, and expectations for a turnaround are running high. After a somewhat mixed Q3 report, it now appears that margins will be under pressure based on trends in ARPU. Broadband net additions would be another KPI that investors will be eagerly awaiting, and this could offset the aforementioned risks.
Market sentiment is overly bearish towards AT&T with a forward P/Cash flow ratio of 4.4x and a yield of 4.7%. Such an absurd combination usually suggests dividend safety issues, but T provides strong dividend coverage. The coverage is likely to further strengthen with EPS forecast to grow at ~7% annual rates, supported by fiber expansion, spectrum acquisitions, and healthy ROCE.
AT&T faces increased leverage and credit risk following major acquisitions, notably fiber assets from Lumen and spectrum licenses from EchoStar. Recent deals will push T's net debt-to-EBITDA to the 3.5x range, with a return to target leverage expected only within three years. Preferred shares T.PR.A and T.PR.C yield just over 6%, but are at risk of downgrades and offer poor value versus higher-yielding, better-rated alternatives.
AT&T (T) offers high yield and stability after a ~20% correction, with downside appearing mechanically contained and pessimism already priced in. ~$16b guided FCF supports ~2x dividend coverage, allowing deleveraging and absorbing current operational and capital cost pressures without threatening income stability. ARPU pressure, higher promotions, and modest churn reflect competitive maturity, while margins, service revenues, and convergence trends remain intact.
AT&T shares have declined, making valuation more attractive and pushing the dividend yield to compelling levels. The dividend yield is now considered attractive for income investors seeking telecom sector exposure. Balance sheet strength has improved versus prior periods, supporting a more favorable investment outlook.
AT&T is rated a "Buy" due to compelling valuation and a 4.7% dividend yield after a 20%+ drawdown. Q3 results showed strong subscriber growth and free cash flow, but ARPU softness and high capex remain concerns. Management reaffirmed long-term guidance and slightly raised 2025 EPS targets, with 2026 EBITDA trimmed on competitive pressures.
AT&T readies its Q4 earnings as 5G expansion, fiber broadband push shape expectations. Stiff competition remains a major headwind.