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T

AT&T NYSE:T Stock Report

Last Price

US$18.27

Market Cap

US$130.2b

7D

-0.4%

1Y

-35.2%

Updated

12 Aug, 2022

Data

Company Financials +
T fundamental analysis
Snowflake Score
Valuation5/6
Future Growth0/6
Past Performance4/6
Financial Health3/6
Dividends4/6

T Stock Overview

AT&T Inc. provides telecommunications, media, and technology services worldwide.

AT&T Competitors

Price History & Performance

Summary of all time highs, changes and price drops for AT&T
Historical stock prices
Current Share PriceUS$18.27
52 Week HighUS$28.29
52 Week LowUS$17.99
Beta0.60
1 Month Change-10.66%
3 Month Change-7.91%
1 Year Change-35.19%
3 Year Change-47.75%
5 Year Change-51.11%
Change since IPO12.86%

Recent News & Updates

Aug 03

AT&T: Why I Remain Bullish

AT&T has seen a significant reduction in average churn over the past five years. Additionally, overall revenue continues to grow. Investors appear to have overly fixated on dividend growth while ignoring the company's organic business growth. For these reasons, I remain long AT&T. Investment Thesis: With churn rates having decreased and overall revenue increasing, the stock could be trading at a significant discount at this point. Over the past five years, investors have been largely bearish on AT&T (T), with the stock having seen a significant decline: investing.com The purpose of this article is to investigate whether there is an increasing disconnect between price and the company's overall performance, and whether we could expect to see a longer-term rebound in upside. Performance One of the most important metrics for a telecommunications company is churn - i.e. the rate at which the company sees customers ceasing to do business with them. To get a broader overview of churn performance for AT&T, I decided to average quarterly churn data for both AT&T and competitor Verizon (VZ), in order to determine whether this metric has been improving (decreasing) over time, and where AT&T stands on this metric relative to its largest competitor. The specific churn rates used were postpaid phone churn for AT&T and wireless retail postpaid phones for Verizon. The original quarterly data and SQL calculations can be found here. Here are the average yearly churn rates for AT&T and Verizon (with 2022 averaging two quarters of data): AT&T Average Churn By Year Year Churn Rate (%) 2018 0.90 2019 0.95 2020 0.79 2021 0.76 2022 0.77 Source: Average churn rate calculated by author using SQL. Verizon Average Churn By Year Year Churn Rate (%) 2018 0.76 2019 0.79 2020 0.67 2021 0.72 2022 0.76 Source: Average churn rate calculated by author using SQL. When looking at the above churn rates, we can see that while that of AT&T was higher than that of Verizon in 2018 - churn rates for the former have decreased significantly over the past five years. This is an encouraging sign as it indicates that less customers are choosing to leave AT&T, and the company is also better able to compete with Verizon in terms of customer retention. That said, when looking at ARPU (or average revenue per user) - we see that this has remained more or less consistent over the past two years, with the company reporting Postpaid Phone-Only ARPU of $54.47 in June 2020 and $54.81 in June 2022. AT&T: 2nd Quarter Earnings 2022 Although revenue has remained constant, I take the view that lower churn provides significant opportunity for the company to grow its customer base and revenue overall - with postpaid subscribers up by over 10% from June 2020 to June 2022. From a financial standpoint, we can see that the company's long-term debt has decreased by 14% from the last quarter, which is encouraging. AT&T: 2nd Quarter Earnings 2022 However, when looking at the company's quick ratio (cash less inventories all over current liabilities), we can see that this ratio has dropped sharply from December - indicating that AT&T has less cash available to meet its short-term liabilities. December 2021 June 2022 Cash and cash equivalents 19223 4018 Inventories 3325 3241 Total current liabilities 106230 47989 Quick ratio 14.97% 1.62% Source: Figures sourced from AT&T 2nd Quarter Earnings 2022. Quick ratio calculated by author. Looking Forward With AT&T having significantly reduced churn rates and showing a reduction in long-term debt, investors have nonetheless seemed coy of this stock.

Jul 26

AT&T: Dirt Cheap And Recession-Proof

AT&T's stock plunged after an unimpressive second quarter. However, the company's headline numbers were robust, and its free cash flow issues are probably transitory. AT&T is essentially recession-proof and should benefit from multiple expansion. AT&T (T) stock recently dropped by about 10% after the company reported its Q2 results. Despite better-than-expected EPS and revenues, enthusiasm was dampened by cash flow concerns. After the recent plunge, AT&T's stock is yielding about 7.3%. Moreover, at around 7.4 times forward EPS estimates, AT&T is dirt cheap again. The market may be overreacting, as the recent earnings report was robust, and the cash flow dip is probably a transitory phenomenon. Additionally, the company has outlined a detailed strategy on how it plans to expand over the next several years. Furthermore, AT&T is essentially recession-proof and could benefit from a management shakeup. AT&T's downside appears very limited, and the stock is compelling here. Multiple expansion and other variables could enable AT&T's stock price to appreciate considerably from here while providing a substantial dividend simultaneously. AT&T's Earnings Stumble AT&T reported non-GAAP EPS of $0.65, beating consensus estimates by $0.03. Revenue of $29.6 billion was also a beat by $130 million. The company posted over 800,000 postpaid phone net adds and more than 300,000 AT&T Fiber net adds in the quarter. While AT&T increased its mobility service revenue guidance to 4.5-5%, it also decreased its free cash flow guidance to the $14 billion range. AT&T's headline numbers are substantial, but the cash flow reduction is disappointing. Heavy investments in 5G and working capital needs are impacting cashflows. However, inflation is probably a factor, and as the economy moves past the difficult phase, AT&T's cash flow issues could resolve quickly. Highlights (investors.att.com) If we look closely, AT&T's numbers were relatively robust. Standalone company revenues came in at $29.6 billion, 2% higher than the $26 billion in the same quarter one year ago. Adjusted EBITDA also grew $175 million or 1.7% YoY. Standalone adjusted EPS increased by 1 cent to 65 cents in the last quarter. Perhaps most importantly, AT&T's core Wireless Service grew by 4.6% YoY and is projected to continue growing similarly throughout 2022 and 2023. Also, we see some FCF notes that imply the decrease in FCF is a temporary phenomenon. While AT&T's results remain solid, and AT&T has shown a tenacity for surpassing consensus analysts' forecasts in recent quarters, it has not prevented the stock from performing terribly against its competition. AT&T Hasn't Done Well Against The Competition Data by YCharts AT&T's stock has performed terribly, down by roughly 33% over the last five years. Verizon (VZ), AT&T's closest competitor, is up slightly over the same time frame. Comcast (CMCSA) is also higher, and T-Mobile US (TMUS) has crushed the competition over the last five years. It's essentially the same if we drag the chart out further, as AT&T's is down by around one-third over the previous ten years. So, you're getting the dividend, but the share price continues to drip lower. We saw a disastrous takeover of Time Warner. AT&T likely overpaid for the media giant, but worse, it mismanaged the merger horribly. Five years later, AT&T spun off WarnerMedia for far less than it had paid to acquire the company. Moreover, AT&T still has a boat load of debt and faces a costly build-out of its 5G network. Where is the innovation? Where is the growth? Where is the higher stock price? AT&T has a great brand and significant potential. The stock is dirt cheap, but where is anything growth-related or even constructive? Time For A Management Change How long will shareholders wait for a real management shakeup? AT&T's management hasn't done anything productive with the company for many years. AT&T's stock has been worse than dead money for decades and trades at the same price it was back in 1995, nearly 28 years ago. AT&T has become incredibly inefficient and is essentially a bureaucracy that needs to change quickly. AT&T needs a new sheriff to establish order and return the company to growth and increasing profitability.

Jul 20

Hold On To AT&T Stock

Although AT&T has not performed well historically during times of low consumer confidence, year-to-date, the stock has significantly outperformed the broader market. Using the Gordon Growth Model, T appears to be fairly valued. However, based on the justified P/E ratio calculation, the stock may have some further upside potential. AT&T has a long track record of safe and sustainable dividend payments. We currently rate the stock as "hold". The broader market has seen a substantial decline since the beginning of the year due to several macroeconomic headwinds, including rising interest rates, high inflation, elevated commodity prices, supply chain disruptions, COVID-19 related restrictions, increasing geopolitical tension in the Eastern European region and a declining consumer confidence in the United States. Some firms, however, have remained relatively unaffected by these macroeconomic challenges, and one of them is AT&T (T). Data by YCharts While the broader market has declined by as much as 17% year-to-date, AT&T’s share price is up by about 12%. In this article, first we will be evaluating how T is expected to perform in the current market environment, based on its historic stock price performance during time periods characterized by low consumer confidence. Then, we will also establish a range of fair values for T’s stock using the Gordon Growth Model and identify a range of justifiable price to earnings ratios. Performance during periods of low consumer confidence Consumer confidence is a leading economic indicator, which is often used to predict near term changes in the spending behavior of the consumer. A low or declining consumer confidence is an indication that people are not sure about their financial outlook and therefore are likely to start reducing their spending and start increasing their savings. Such a behavior is expected to have a more pronounced impact on firm’s that manufacture and sell durable, discretionary, non-essential goods. Services may also be impacted, as people are likely to start reducing costs by choosing lower cost alternatives. Consumer confidence in the United States had already seen a sharp drop in 2020, when the pandemic started, however in 2022 the decline has continued. The current U.S. consumer confidence is even lower than the levels observed during the 2008-2009 financial crisis. Although consumer spending has remained strong in the first half of 2022, we believe that the low confidence is eventually going to result in slowing spending. U.S. Consumer confidence (Tradingeconomics.com) Let us now take a look at how AT&T has actually performed during times of low consumer confidence in the last 20 years. Our periods of interest are marked by the red circles. 2001-2003 In this period, T underperformed the S&P500 by about 10%, losing more than 43% of its market value in this two year period. Data by YCharts 2007-2010 Between 2007 and 2010, the firm performed in line with the broader market during the entire period. Both the SPY and T declined by about 21% in this three year time frame. Data by YCharts 2011-2013 In this time period, both the broader market and AT&T closed in the positive territory. And once again the firm performed in line with the broader market. Data by YCharts Although past performance is not always indicative of future performance, we expect that based on these three time periods, AT&T’s stock may not be a safe haven during periods, characterized by low consumer confidence levels. In our opinion, the Integrated Telecommunication Services industry is in general very competitive. The pricing power of the firms is limited and the switching cost between providers is relatively low. For these reasons, we believe that the stock’s outperformance may continue in the short term, but are not likely to be sustainable in the longer run. Let us take a look now at the firm from a valuation point of view. To value the firm, we will be using the Gordon Growth Model. Valuation Gordon Growth Model The Gordon Growth Model is a simple dividend discount model, which can be applied to determine the fair value of equity of dividend paying stock. For the Gordon Growth Model to be applicable, the firm should fulfill a set of criteria: The company pays a dividend Stable dividend growth is expected at a constant rate in perpetuity The firm is relatively unaffected by the business cycle fluctuations Also a plus, if a firm has a strong track record of steadily increasing dividend payments. AT&T has been paying a safe and sustainable dividend for the last 38 years, and even increasing the payout in most of the years. The current annual dividend is $1.11 per share. We believe that it is a suitable candidate to be valued by using this dividend discount model. Dividend history (Seekingalpha.com) The following formula describes the mathematics behind the GGM. Gordon Growth Model (wallstreetprep.com) In order to determine a fair value, we have to make two assumptions: What is our required rate of return? For the required rate of return, we usually like to use the weighted average cost of capital ('WACC') of the firm. The WACC of AT&T is in the range of 7% to 8.3%. WACC (Finbox.com) To stay relatively conservative in our analysis, we will be using a required rate of return from the higher end of this spectrum, 8%. 2. What is a reasonable assumption for the stable and constant dividend growth rate in perpetuity? The following table summarizes the dividend growth rate for several different periods. In our opinion, these figures may not be the most representative because of the recent dividend cut in 2021. Dividend growth (Seekingalpha.com) Between 2010 and 2020, the dividend has increased by an average of about 2%, we will be using it as our most likely case. However, to account for uncertainty, we will conduct our analysis using a range of 1% to 3%. Results (Author) As the stock is currently trading around, $21 per share, it is in the upper end of our fair value range. Although T may be fairly valued, based on this measure, the stock is not likely to offer significant upside potential. Let us see, what the justified P/E ratio of the stock could be. Justified price-to-earnings ratio Price multiples are often given little weight, as many claim that it is a backward looking measure. However, using the Gordon Growth Model, present value calculations could be combined with the P/E ratio, resulting in the so-called justified P/E.

Shareholder Returns

TUS TelecomUS Market
7D-0.4%0.4%1.3%
1Y-35.2%-25.8%-11.7%

Return vs Industry: T underperformed the US Telecom industry which returned -25.8% over the past year.

Return vs Market: T underperformed the US Market which returned -11.7% over the past year.

Price Volatility

Is T's price volatile compared to industry and market?
T volatility
T Average Weekly Movement3.8%
Telecom Industry Average Movement7.4%
Market Average Movement7.8%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

Stable Share Price: T is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: T's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1983203,000John Stankeyhttps://www.att.com

AT&T Inc. provides telecommunications, media, and technology services worldwide. Its Communications segment offers wireless voice and data communications services; and sells handsets, wireless data cards, wireless computing devices, and carrying cases and hands-free devices through its own company-owned stores, agents, and third-party retail stores. It also provides data, voice, security, cloud solutions, outsourcing, and managed and professional services, as well as customer premises equipment for multinational corporations, small and mid-sized businesses, governmental, and wholesale customers.

AT&T Fundamentals Summary

How do AT&T's earnings and revenue compare to its market cap?
T fundamental statistics
Market CapUS$130.19b
Earnings (TTM)US$16.19b
Revenue (TTM)US$156.60b

8.0x

P/E Ratio

0.8x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
T income statement (TTM)
RevenueUS$156.60b
Cost of RevenueUS$72.13b
Gross ProfitUS$84.47b
Other ExpensesUS$68.28b
EarningsUS$16.19b

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)2.27
Gross Margin53.94%
Net Profit Margin10.34%
Debt/Equity Ratio102.3%

How did T perform over the long term?

See historical performance and comparison

Dividends

6.1%

Current Dividend Yield

71%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is T undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for T?

Other financial metrics that can be useful for relative valuation.

T key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue2x
Enterprise Value/EBITDA5.8x
PEG Ratio4.5x

Price to Earnings Ratio vs Peers

How does T's PE Ratio compare to its peers?

T PE Ratio vs Peers
The above table shows the PE ratio for T vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average42.6x
VZ Verizon Communications
9.1x4.8%US$189.6b
FYBR Frontier Communications Parent
13.8x-61.5%US$6.7b
IHS IHS Holding
133.1x43.7%US$2.8b
IDT IDT
14.4xn/aUS$700.1m
T AT&T
8x1.8%US$130.2b

Price-To-Earnings vs Peers: T is good value based on its Price-To-Earnings Ratio (8x) compared to the peer average (42.6x).


Price to Earnings Ratio vs Industry

How does T's PE Ratio compare vs other companies in the Global Telecom Industry?

Price-To-Earnings vs Industry: T is good value based on its Price-To-Earnings Ratio (8x) compared to the US Telecom industry average (12.6x)


Price to Earnings Ratio vs Fair Ratio

What is T's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

T PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio8x
Fair PE Ratio11.8x

Price-To-Earnings vs Fair Ratio: T is good value based on its Price-To-Earnings Ratio (8x) compared to the estimated Fair Price-To-Earnings Ratio (11.8x).


Share Price vs Fair Value

What is the Fair Price of T when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: T ($18.27) is trading below our estimate of fair value ($88.55)

Significantly Below Fair Value: T is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


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Future Growth

How is AT&T forecast to perform in the next 1 to 3 years based on estimates from 24 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


1.8%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: T's forecast earnings growth (1.8% per year) is below the savings rate (1.9%).

Earnings vs Market: T's earnings (1.8% per year) are forecast to grow slower than the US market (14.4% per year).

High Growth Earnings: T's earnings are forecast to grow, but not significantly.

Revenue vs Market: T's revenue is expected to decline over the next 3 years (-0.5% per year).

High Growth Revenue: T's revenue is forecast to decline over the next 3 years (-0.5% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: T's Return on Equity is forecast to be low in 3 years time (12.5%).


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Past Performance

How has AT&T performed over the past 5 years?

Past Performance Score

4/6

Past Performance Score 4/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-21.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: T has high quality earnings.

Growing Profit Margin: T's current net profit margins (10.3%) are higher than last year (1%).


Past Earnings Growth Analysis

Earnings Trend: T's earnings have declined by 21.8% per year over the past 5 years.

Accelerating Growth: T's earnings growth over the past year (926.4%) exceeds its 5-year average (-21.8% per year).

Earnings vs Industry: T earnings growth over the past year (926.4%) exceeded the Telecom industry -34.4%.


Return on Equity

High ROE: T's Return on Equity (13.2%) is considered low.


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Financial Health

How is AT&T's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: T's short term assets ($34.5B) do not cover its short term liabilities ($49.2B).

Long Term Liabilities: T's short term assets ($34.5B) do not cover its long term liabilities ($241.9B).


Debt to Equity History and Analysis

Debt Level: T's net debt to equity ratio (99.3%) is considered high.

Reducing Debt: T's debt to equity ratio has reduced from 116.4% to 102.3% over the past 5 years.

Debt Coverage: T's debt is well covered by operating cash flow (23.7%).

Interest Coverage: T's interest payments on its debt are well covered by EBIT (5x coverage).


Balance Sheet


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Dividend

What is AT&T current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


6.08%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: T's dividend (6.08%) is higher than the bottom 25% of dividend payers in the US market (1.49%).

High Dividend: T's dividend (6.08%) is in the top 25% of dividend payers in the US market (4%)


Stability and Growth of Payments

Stable Dividend: T's dividend payments have been volatile in the past 10 years.

Growing Dividend: T's dividend payments have fallen over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (70.7%), T's dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (55.2%), T's dividend payments are covered by cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

6.6yrs

Average management tenure


CEO

John Stankey (59 yo)

2.08yrs

Tenure

US$24,820,879

Compensation

Mr. John T. Stankey has been Chief Executive Officer of AT&T Inc. since July 1, 2020 and as its Director since June 1, 2020. He has been President of AT&T Inc. He served as President and Chief Operating Of...


CEO Compensation Analysis

Compensation vs Market: John's total compensation ($USD24.82M) is above average for companies of similar size in the US market ($USD12.88M).

Compensation vs Earnings: John's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: T's management team is seasoned and experienced (6.6 years average tenure).


Board Members

Experienced Board: T's board of directors are considered experienced (8 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

AT&T Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: AT&T Inc.
  • Ticker: T
  • Exchange: NYSE
  • Founded: 1983
  • Industry: Integrated Telecommunication Services
  • Sector: Telecom
  • Implied Market Cap: US$130.190b
  • Shares outstanding: 7.13b
  • Website: https://www.att.com

Number of Employees


Location

  • AT&T Inc.
  • 208 South Akard Street
  • Dallas
  • Texas
  • 75202
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/12 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.