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U.S. telecom company AT&T (NYSE:T) is scheduled to announce Q2 earnings results on Wednesday, July 26th, before market open. The consensus EPS estimate is $0.60 and the consensus revenue estimate is $29.95 billion. Over the last 2 years, the company has beaten EPS estimates 100% of the time and has beaten revenue estimates 50% of the time. Over the last 3 months, EPS estimates have seen 3 upward revisions and 5 downward. Revenue estimates have seen 2 upward revisions and 9 downward. The company on April 20 reported Q1 non-GAAP EPS of $0.60, beating estimates by just 1 cent. Revenue of $30.14 billion was up 1.4% from last year but fell short of analyst expectations by $80 million. T has a Quant rating of “HOLD”, with a 3.34 rating score. T has an industry ranking of 8 out of 27 among integrated telecommunication services stocks, as per SA’s Quant ranking, one spot ahead of Verizon. Wall Street and Seeking Alpha analysts rate the T stock “BUY”. T stock rose 3% in 2022, while the benchmark S&P 500 index slipped nearly 20% for the year. Stock is down 16.5% so far this year as of Monday’s close. The S&P 500 Communication Services Index is up 36.1% YTD.
Recent analyses on AT&T:
“AT&T has been a disappointment to many shareholders, including myself. I still feel AT&T is undervalued, but they have been stuck in a perpetual downtrend that is becoming harder to eliminate. I think many investors see the amount of debt and run for the hills without understanding the maturity structure or AT&T’s ability to service its obligations. I believe that if AT&T accepted that it would always be a communications company and worked on further deleveraging the balance sheet and returning additional capital to shareholders, the market would reward them. Nothing has worked, and the only way for AT&T to create shareholder value is to buy back shares, reduce debt and reinstate annual dividend increase. This all starts with hitting their $16 billion in FCF number for 2023 and increasing their FCF going forward. Hopefully, management can get the job done because the current valuation is astonishing,” writes SA contributor Steven Fiorillo in a July 24 analysis.
“I admit that investors may face a dilemma in terms of investing in AT&T, with declining growth potential and a valuation nearing a three-decade low. The stock experienced significant drops following disappointing 1Q FY2023 earnings and negative impacts from WSJ’s cables news. Despite the current pressure on its upward momentum, the stock presents an opportunity for deep value and income generating investors with its appealing 7.6% dividend yield and healthy balance sheet. However, investors should be cautious to avoid a potential value trap, despite the extreme selloff in this year. Nevertheless, the downside risk is that the competition from TMUS and other major players could significantly impact AT&T’s long-term growth trajectory, possibly justifying the stock’s current cheap valuation,” writes SA contributor Johnny Zhang in a July 21 report.
Value Creation Vs. Value Capture: Why AT&T Will Always Struggle by Dane Bowler, leader of the “Portfolio Income Solutions” Investing Group on Seeking Alpha.