AT&T (T) Company Overview & Stock Price Forecast
This article provides a brief analysis and stock rating for AT&T (T) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.
Stock Price Target: $31.87
In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for AT&T in comparison to the Telecom Services industry and the S&P 500.
AT&T is a Large Cap company with a Market Cap of $178.2B.
How are investors using AT&T earnings yield to assess the company?
The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).
The current earnings yield for AT&T is 14.64%%, in comparison to 3.38% for the S&P 500 and 1.54% for the 10-year treasury bond. The median earnings yield for the Telecom Services industry is 13.51%.
What does AT&T Price-to-Earnings Ratio (P/E) tell investors about the company?
The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings.
AT&T is currently trading at a P/E of 203.29. The P/E for the Telecom Services industry is 11.59 and the P/E for the S&P 500 is 29.59.
What is the current Price-to-Sales Ratio (P/S) for AT&T?
The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.
AT&T is currently trading at a P/S of 1.02. The P/S for the Telecom Services industry is 1.41 and the P/S for the S&P 500 is 3.21.
How does AT&T Price-to-BookRatio (P/B) compare to the Telecom Services industry?
Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.
AT&T P/B ratio is 1.08. The P/B for the Telecom Services industry is 1.73 and the P/B for the S&P 500 is 4.84.
How attractive is AT&T Return on Invested Capital (ROIC) to investors?
Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.
Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.
AT&T ROIC is currently 0.33% in comparison to 5.76% for the Telecom Services industry and 8.60% for the S&P 500.
What is AT&T YTD Performance in comparison to its industry and the total market?
The year-to-date (YTD) performance is the amount of profit/loss realized by a stock since the first trading day of the current calendar year.
The YTD performance for AT&T is -13.91%. The Telecom Services industry has a YTD performance of -12.01% in comparison to the YTD S&P 500 performance of 25.22%.
Recent Financial Results (Q3, 21)
- Consolidated revenues of $39.9B
- Operating expenses were $32.8B versus $36.2B in the year prior
- Operating income of $7.1B versus $6.1B in the year prior
- Diluted EPS of $0.82 compared to $0.39 in the year-ago quarter
- Adjusted EPS of $0.87 compared to $0.76 in the year-ago quarter
- Cash from operations of $9.9B
- Capital expenditures of $4.7B; gross capital investment1 of $5.7B and cash content spend of $4.8B
- Free cash flow of $5.2B
Stock Price Target: $31.87
AT&T provides telecommunication, media, and technology services worldwide. The company operates through Communications, WarnerMedia, and Latin America segments.
Notably, AT&T operates cable networks and the video on demand streaming platform under the HBO Max and HBO GO names, multichannel pay television services under the HBO and Cinemax, and digital media properties.
The company was formerly known as SBC Communications and changed its name to AT&T in November 2005. AT&T was incorporated in 1983 and is headquartered in Dallas, Texas. The current CEO is John Stankey.
This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.