On July 19, 2023, AT&T Inc (T, Financial) experienced an 8.48% increase in its stock price, reaching $14.59. With a substantial market cap of $104.3 billion and sales of $121.2 billion, AT&T (T) continues to make its mark in the telecommunications industry. The company's GF Value, an indicator of intrinsic worth, is currently estimated at $15.2, indicating that the stock is fairly valued.
AT&T Inc (T, Financial) is predominantly known for its wireless business, which accounts for about two-thirds of its revenue. The company serves as the third-largest U.S. wireless carrier, connecting 70 million postpaid and 18 million prepaid phone customers. In addition to its wireless segment, AT&T (T) provides fixed-line enterprise services, residential fixed-line services, and has a significant presence in Mexico. The company also holds a 70% equity stake in satellite television provider DirecTV.
GF Value Analysis
The GF Value of AT&T (T, Financial) is determined by a combination of historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. The GF Value Line represents the fair value at which the stock should ideally be traded. Based on the current price of AT&T (T), the stock is considered to be fairly valued, suggesting that the long-term return of its stock is likely to be close to the rate of its business growth.
Link: These companies may deliver higher future returns at reduced risk.
Financial Strength
When investing, it's essential to consider the financial strength of a company. AT&T's cash-to-debt ratio stands at 0.02, which is lower than 93.45% of companies in the Telecommunication Services industry. This indicates that AT&T's overall financial strength is somewhat weak, with a rating of 3 out of 10.
Profitability
AT&T has demonstrated consistent profitability over the past 10 years, with a revenue of $121.2 billion and an EPS of $-1.27 in the past twelve months. Its operating margin is 19.29%, ranking better than 77.49% of companies in the Telecommunication Services industry. Overall, AT&T's profitability is considered fair, with a rating of 7 out of 10.
Growth
The average annual revenue growth of AT&T is -13.6%, which is lower than 88.19% of companies in the Telecommunication Services industry. The 3-year average EBITDA growth is -28.2%, which is also lower than 91.92% of companies in the same industry.
ROIC vs WACC
AT&T's return on invested capital (ROIC) of 10.67 is higher than its weighted average cost of capital (WACC) of 4.82, indicating that the company is creating value for shareholders.
Conclusion
AT&T Inc (T, Financial) is considered to be a fairly valued stock with poor financial strength but fair profitability. Its growth ranks lower than 91.92% of companies in the Telecommunication Services industry. To learn more about AT&T stock, you can check out its 30-Year Financials here.
To find out the high quality companies that may deliver above-average returns, please check out GuruFocus High Quality Low Capex Screener.
