Since AT&T Inc. (NYSE:T) released its earnings in December 2018, the consensus outlook from analysts appear somewhat bearish, as a 3.1% rise in profits is expected in the upcoming year, relative to the higher past 5-year average growth rate of 18%. Currently with trailing-twelve-month earnings of US$19b, we can expect this to reach US$20b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Can we expect AT&T to keep growing?
Over the next three years, it seems the consensus view of the 25 analysts covering T is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of T’s earnings growth over these next few years.
From the current net income level of US$19b and the final forecast of US$23b by 2022, the annual rate of growth for T’s earnings is 5.8%. EPS reaches $3.1 in the final year of forecast compared to the current $2.86 EPS today. With a current profit margin of 11%, this movement will result in a margin of 13% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For AT&T, there are three fundamental aspects you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is AT&T worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether AT&T is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of AT&T? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.