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AT&T Inc T

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Stock XNYS Rating as of
$16.58 −0.23 (1.37%)
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As of Delayed Price Closed
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Company Report

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AT&T Earnings: The Network Outage Didn’t Stop Solid Growth or Cash Flow

Michael Hodel

We saw a lot of things to like in AT&T’s first-quarter results. The firm delivered near-record low wireless customer churn (the pace of customer defections) and increased revenue per wireless customer despite the network outage and resulting bill credits that hit in February. Cost-cutting and the slow pace of phone upgrades have buoyed margins, while network investment has moderated, yielding solid free cash flow. The fixed-line business services segment remains the primary weak spot for AT&T, with revenue and margins again contracting sharply. Our fair value estimate remains $23, and we believe the market is underestimating the stability of the US wireless industry.

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Price vs Fair Value

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T is trading within a range we consider fairly valued.
Price
$16.31
Fair Value
$35.00
Uncertainty
Medium
1-Star Price
$36.73
5-Star Price
$16.20
Economic Moat
Lbmdrm
Capital Allocation
Fky

Bulls Say, Bears Say

Bulls

Following a period of investment, AT&T will hold a nationwide 5G wireless network with deep spectrum behind it and a fiber network capable of reaching nearly one fourth of the US.

Bears

The cost of maintaining dominance in the wireless industry by controlling spectrum has been exceptionally high over the years. AT&T has spent $40 billion over the past three years for licenses with few prospects for incremental revenue.

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Trading Information

Previous Close Price
$16.81
Day Range
$16.50–17.00
52-Week Range
$13.43–18.16
Bid/Ask
$16.56 / $16.61
Market Cap
$118.88 Bil
Volume/Avg
46.7 Mil / 37.8 Mil

Key Statistics

Price/Earnings (Normalized)
6.98
Price/Sales
0.99
Dividend Yield (Trailing)
6.60%
Dividend Yield (Forward)
6.60%
Total Yield
6.74%

Company Profile

The wireless business contributes about two thirds of AT&T’s revenue. The firm is the third-largest US wireless carrier, connecting 72 million postpaid and 17 million prepaid phone customers. Fixed-line enterprise services, which account for about 16% of revenue, include internet access, private networking, security, voice, and wholesale network capacity. Residential fixed-line services, about 11% of revenue, primarily consist of broadband internet access, serving 14 million customers. AT&T also has a sizable presence in Mexico, with 22 million customers, but this business only accounts for 3% of revenue. The firm still holds a 70% equity stake in satellite television provider DirecTV but does not consolidate this business in its financial statements.
Sector
Communication Services
Industry
Telecom Services
Stock Style Box
Large Value
Total Number of Employees
160,700
Website
https://www.att.com

Competitors

Valuation

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Metric
T
CMCSA
VZ
Price/Earnings (Normalized)
 6.989.268.33
Price/Book Value
 1.151.821.76
Price/Sales
 0.991.271.23
Price/Cash Flow
 2.935.624.32
Price/Earnings
T
CMCSA
VZ

Financial Strength

Metric
T
CMCSA
VZ
Quick Ratio
 0.330.490.52
Current Ratio
 0.710.590.71
Interest Coverage
 3.965.993.72
Quick Ratio
T
CMCSA
VZ

Profitability

Metric
T
CMCSA
VZ
Return on Assets (Normalized)
 4.17%6.32%4.66%
Return on Equity (Normalized)
 16.72%19.98%18.99%
Return on Invested Capital (Normalized)
 8.19%10.60%7.89%
Return on Assets
T
CMCSA
VZ
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