Anticipating AT&T’s Q2 Comeback

Summary:

  • T has performed well, delivering a total return of 43% since August 2023, outpacing the market.
  • AT&T added 349,000 postpaid phone subscribers in Q1 2024, significantly outpacing Verizon, and shows continued strength in its fiber broadband segment with 252,000 net additions.
  • AT&T reduced its debt to $128.7 billion from $134.7 billion, targeting a net debt to adjusted EBITDA ratio of 2.5x by mid-2025, supported by a strong balance sheet.
  • Trading at 8.6 times 2024 earnings with a near 6% dividend yield, AT&T’s stock is undervalued, bolstered by growth in its 5G and fiber broadband segments.
  • Analysts expect AT&T to report Q2 earnings of $0.58 per share and revenues of $30 billion, maintaining performance despite economic headwinds and flat handset sales.

AT&T cell phone retail store. AT&T plans to ramp up investment in 5G and fiber optic connectivity, key areas of growth.

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Investment Thesis

Since our initial bullish investment thesis on AT&T (NYSE:T) was published on August 2, 2023, the stock has performed remarkably well. It has delivered a total return of 43%, including dividends, significantly outpacing the broader market’s return.


Analyst’s Disclosure: I/we have a beneficial long position in the shares of T either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.


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