Assessing AT&T’s Value After Shares Surge 53% and Analysts Highlight Policy Tailwinds

If you have been eyeing AT&T and wondering whether now is the right time to make a move, you are not alone. The market has been watching closely as this telecom giant’s stock steadily climbed, with AT&T delivering a 53.1% gain over the past year and 25.9% just since the start of this year. Even after a minor dip of -0.8% in the past week, the long-term chart hints at real staying power, topped off by a 92.2% three-year return. That kind of outperformance inevitably sparks debates about whether the stock is still a bargain or if most of the upside has already been claimed.

Recent market shifts have favored stable, income-focused stocks like AT&T as many investors rotate out of higher risk assets, seeking dividend reliability alongside upside surprise. AT&T’s performance isn’t just about steady phone bills and streaming services. Investors are reevaluating its risk in light of industry changes and some positive sentiment around telecom policy. The result is a growth story that feels increasingly convincing and encourages a fresh look at the value on offer.

Looking at how the company stacks up on valuation, AT&T scores a 5 out of 6, meaning it’s been flagged as undervalued by the majority of traditional metrics. That score alone turns a lot of heads, but what does it really mean for your investment decision? In the next section, we will break down each of those valuation approaches and then dig even deeper into what truly matters for long-term investors. Sometimes the numbers only tell half the story.

AT&T delivered 53.1% returns over the last year. See how this stacks up to the rest of the Telecom industry.

Approach 1: AT&T Cash Flows

The Discounted Cash Flow (DCF) model is a popular method for estimating a company’s true worth by projecting its future cash flows and discounting those amounts back to today’s value. Essentially, it asks: how much would you pay today for all the cash AT&T will likely generate in the future?

AT&T’s trailing twelve-month Free Cash Flow stands at $21.6 billion, making it one of the largest FCF generators in the telecom space. Analysts provide FCF estimates for the next five years, projecting a steady annual increase driven by strategic investments and operational stability. By 2029, forecasts place AT&T’s Free Cash Flow at approximately $21.6 billion. Simply Wall St extrapolates this figure to almost $27.2 billion by 2035 under modest growth assumptions.

Using these numbers in a two-stage DCF model results in an estimated intrinsic value for AT&T of $77.31 per share. Comparing this to the current market price shows that AT&T is trading at a 62.8% discount. In other words, it appears 62.8% undervalued according to this model.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for AT&T.

Our DCF analysis suggests AT&T is undervalued by 62.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: AT&T Price vs Earnings

The Price-to-Earnings (PE) ratio is a go-to valuation metric, especially for profitable companies like AT&T. It gives a quick sense of how much investors are willing to pay today for each dollar of earnings, making it one of the most widely used benchmarks in the market.

What makes a PE ratio “fair” depends a lot on company-specific factors. Higher expected growth, stronger profitability, or lower risk can justify a higher PE, while the opposite tends to bring that number down. It is common to compare a stock’s PE against its industry peers or the broader market to see if it trades at a discount or premium for good reason.

AT&T currently trades at a PE ratio of 16.2x, which is below both the Telecom industry average of 17.6x and the peer group’s average of 18.1x. However, these comparisons do not always capture the nuance behind the numbers. That is where the Simply Wall St “Fair Ratio” comes in. This proprietary metric evaluates what AT&T’s PE should be, factoring in its earnings growth, risks, margins, industry characteristics, and market cap. For AT&T, the Fair Ratio is 18.5x, which means the current valuation is below what would be expected based on its fundamentals. This approach provides a more rounded, objective assessment than a simple peer comparison.

Since AT&T’s actual PE ratio is notably less than its Fair Ratio, the stock appears undervalued on this metric as well.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your AT&T Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, yet powerful tool that lets you attach your own story and perspective to a company's numbers, connecting what you believe about AT&T’s future with estimated financials like revenue, earnings, and profit margins to determine your personal Fair Value.

Narratives bridge the gap between the story you believe about a company and a concrete forecast of its financial future, turning that view directly into an actionable fair value estimate. On Simply Wall St’s Community page, millions of investors use Narratives to compare their Fair Value against the current Price, helping them decide when it may be the right time to buy or sell. Since Narratives update automatically when new data and news arrive, your insights always reflect the latest picture.

For example, one investor might be optimistic, building a Narrative where AT&T’s accelerated 5G and fiber investments drive earnings and raise fair value above $31 per share. Another investor might look at tougher competition and ongoing legacy risks, arriving at a cautious narrative with a fair value closer to $21.87. Narratives make it easy to see these perspectives and choose the one that fits your own investment view.

Do you think there's more to the story for AT&T? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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