AT&T (T) Earnings Analysis
Chart done on daily timeframe. Shares of the wireless giant AT&T are trading higher this morning after the company’s latest earnings report. Starting off with subscriber growth, AT&T added 419,000 new postpaid subscribers, significantly above the 261,000 estimates; however despite the strong jump on subscribers, the company’s revenue still fell 0.4% year over year to $29.8B. AT&T reported earnings per share of 49 cents, also down from last year’s 61 cents. The number behind the jump was likely their free cash flow figure, which is projected to reach 17-18B this year, a promising sign for its investors. During times of uncertainty, it’s the companies with the largest amount of free cash flow that are often favored by investors. Free cash flow gives companies the ability to withstand black swan events, spend more money of research, increase dividend, and, if necessary, buy out competition.
AT&T’s struggles from earlier this year from their data leak is still a concern for many customers, but the company’s numbers are reflecting strong trends despite the concerns. It will take time to build up that trust again, but at least for now it doesn’t seem to be hurting them too bad. AT&T is also the largest fiber builder in the nation, which still presents a large opportunity as the transition to fiber internet continues.
Valued at only 135B, the company is cheaper than its primary competitors, which are Verizon and T-Mobile; and although Verizon generates more revenue, their price to earnings ratio is higher, and so is T-Mobile’s. Verizon is currently trading at a price to earnings ratio of 24, Verizon at 14, and AT&T is at 10. This makes AT&T the more attractive names from the three, especially considering their track record of strong revenues. The company’s long standing dividend is also rewarding its investors who hold through the ups and downs.