Understanding AT&T Inc’s (NYSE:T) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how AT&T is doing by evaluating its latest earnings with its longer term trend as well as its industry peers’ performance over the same period. View out our latest analysis for AT&T
Did T beat its long-term earnings growth trend and its industry?T’s trailing twelve-month earnings (from 31 March 2018) of US$30.64b has more than doubled from US$12.98b in the prior year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 14.01%, indicating the rate at which T is growing has accelerated. How has it been able to do this? Let’s see whether it is solely due to industry tailwinds, or if AT&T has seen some company-specific growth.
In the last few years, AT&T increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the US telecom industry has been growing, albeit, at a muted single-digit rate of 6.44% in the prior twelve months, and 3.97% over the last five years. This means that any uplift the industry is deriving benefit from, AT&T is able to leverage this to its advantage.In terms of returns from investment, AT&T has invested its equity funds well leading to a 21.10% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 8.38% exceeds the US Telecom industry of 5.00%, indicating AT&T has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for AT&T’s debt level, has increased over the past 3 years from 4.13% to 4.88%.
What does this mean?
AT&T’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research AT&T to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for T’s future growth? Take a look at our free research report of analyst consensus for T’s outlook.
- Financial Health: Is T’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.