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Analyzing the Year-End Rise of AT&T (T) -- Buy or Hold?

AT&T (T) is currently struggling with its debt burden and slowing wireless subscriber growth. While T is registering year-end gains, is the stock worth buying? Read on...

AT&T Inc. (T) is currently grappling with an arduous competitive landscape and elevated debt levels. Furthermore, the rate of subscriber growth is trailing behind its foremost competitors. The company is facing the challenge of a climbing churn rate, indicating that customers are voicing rising dissatisfaction and opting to leave for competitors.

Even though AT&T's dividend payments have traditionally been appealing to investors, the overwhelming magnitude of debt signals a cause for concern. Over the last three years, the company’s dividend payouts have declined at a CAGR of 10.9%. This significant level of debt may trigger further reductions in payouts.

T is saddled with $162.61 billion in total debt, while its net debt is $154.97 billion. Its total cash stood at $7.63 billion. Moreover, AT&T's quick ratio is lodged at 0.41, calling into question its capacity to meet immediate liabilities.

Given these uncertainties, it seems unwise to view this as an ideal entry point for investing in the stock despite its year-end gains. A detailed examination of AT&T's key performance indicators might provide insightful analysis.

Analysis of AT&T Inc.'s Financial Trends from 2020 to 2023

The trailing-12-month Net Income trend and fluctuations for T could be summarized as follows:

  • On December 31, 2020, the Net Income was -$5.18 billion. This marked a low point in the company's financial strength.
  • Between March 31, 2021, and September 30, 2022, there was a gradual increase in Net Income, moving from a negative -$2.24 billion to a positive of $20.04 billion. There was a quick pipe up to $20.08 billion at the end of December, in 2021 before falling slightly to $17.34 billion in March 2022.
  • From June 30, 2022 to September 30, 2022, Net Income rose steadily, peaking at $20.04 billion. This is the highest recorded value in the entire series.
  • However, from December 31, 2022, there was a significant drop in Net Income to -$8.52 billion. This downward trend continued throughout 2023, with Net Income falling further to -$11.31 billion on September 30.

Overall, comparing the first value (-$5.18 billion on December 31, 2020) to the last one (-$11.31 billion on September 30, 2023), there has been negative growth in Net Income over this period. It's important to note that while there were periods of improvement, particularly in 2021 and most of 2022, these were overshadowed by the losses in 2020 and the significant downturn towards the end of 2022 and into 2023.

The series indicated the trailing-12-month Revenue trend and fluctuations for AT&T Inc. (T). The trend in revenue is critical to understand, and it's worth noting that recent data and the last value should be prioritized. Here are the key points:

  • The Revenue started at $171.76 billion on December 31, 2020, then peaked at $176.015 billion in June 2021.
  • From the peak in 2021, it started a downward trend with a steady dip from $176.015 billion in June 2021 to a low of $120.741 billion in December 2022. It represents an approximate 31% decline over this period.
  • As of 2023, the Revenue seems to have stabilized somewhat around $121.168 billion as of March 2023 and remain slightly increasing to $121.749 billion by September 2023.
  • To measure growth rate over the whole period: comparing the first value of $171.76 billion from December 2020 to the last value of $121.749 billion in September 2023, there's been an approximate decrease of approximately 29.13%, indicating negative growth across the selected time frame.

Overall, the trend is characterized by an initial increase followed by a more significant decrease, then stabilization and minor increase towards more recent periods. This analysis could suggest a volatile business environment or changing conditions for AT&T Inc. during these times.

The trend and fluctuations of the Dividend Per Share (DPS) for AT&T Inc. (T) are as follows:

  • Starting at the end of 2020, the DPS remained stable at $2.08 from December 2020 through December 2021.
  • A noticeable decrease started in March 2022 when the DPS fell to $1.838. This decline continued with the DPS reaching $1.595 in June 2022 and further reducing to $1.353 by September 2022.
  • The most significant drop was seen by the end of December 2022, with the DPS reported at $1.11, representing a significant decrease from the previous year's $2.08.
  • It is notable that the DPS remained constant at this lower rate of $1.11 from March to September 2023.

In terms of growth rate, using the first and last values in the series, we perceive a downward trend. From an initial DPS of $2.08 in December 2020 to a DPS of $1.11 in September 2023 represents a decline of approximately 47%. In summary, throughout this period, AT&T's DPS witnessed a substantial decrease, particularly from March 2022 onwards. This downward trajectory has since stabilized, albeit at a much lower DPS rate.

The data series provided presents the Analyst Price Target trend for AT&T Inc. (T) over the course of two years, from November 2021 to December 2023.

  • The price target started at $31 in November 2021.
  • There was a slight decline to $30.48 in December 2021, which remained steady at $30 up until March 2022.
  • In April 2022, there was a significant decrease to $27.55 followed by a drop to $24.69 in May 2022.
  • After a minor fluctuation, the lowest point in the following months was reached in July 2022 at $22.75.
  • Few minor fluctuations observed thereafter as it hovered around the $22 mark from August 2022 and through June 2023.
  • A further decrease was seen as the Price Target dipped to $21.62 in July 2023, marking another low of this period.
  • The value dropped significantly to reach $20 in August 2023 and continued its downward trend to drop to $19.86 by November 2023.
  • By the end of the period in December 2023, the Price Target saw a slight increase to $20 but was still notably lower than its original value.

In terms of growth rate, comparing the first value of $31 in November 2021 to the last value of $20 in December 2023, we observe a significant decrease of around 35.48%. This suggests overall, the trend and fluctuations indicated a negative growth rate.

Emphasizing on more recent data, we see that since August 2023, the price target has seen a relatively steady decrease, reaching its lowest point at $19.86 in November 2023 before slightly increasing to $20 in December 2023. This suggests a continuation of the downward trend with minor fluctuations in recent times.

AT&T's Share Price Analysis: July-December 2023 Steady Growth Despite Initial Downtrend

Analyzing the share price movement of AT&T Inc. (T) from July to December of 2023, several trends are clear.

  • On July 7, 2023, the share price was $15.93. Over the subsequent weeks in July, the price declined steadily to reach a low of $14.23 on July 21 before slightly rebounding to $14.75 on July 28.
  • In August 2023, the share price remained somewhat stable but still trended slightly downwards. The price decreased from $14.28 on August 4 to $14.13 on August 18 before making a negligible rise to $14.15 by August 25.
  • A gradual rise is noted in September. The price increased from $14.63 on the first day of the month to reach a peak of $15.28 on September 22, before slightly dropping back to $14.96 by the end of the month.
  • Throughout October, the share price fluctuated between $14.63 (October 6) and $15.15 (October 27), indicating a slight upward trend for the month.
  • In November, there was a continual increase in T's share price. It started at $15.56 on November 3 and ended the month at an increased value of $16.16 on November 24,
  • The positive movement continued into December, peaking at $16.97 on December 8. There was then a decrease to $16.52 on December 15, with little change for the rest of the month, ending slightly up at $16.62 on December 28.

Overall, there was a clear growth trend in AT&T's share price from July to December 2023. The price initially decreased from mid-July to mid-August, then slowly increased through September and October, significantly accelerated in November, before ending relatively stable in December. Here is a chart of T's price over the past 180 days.

Analyzing AT&T's Growth, Momentum, and Value Dimensions: A 2023 Outlook

T has an overall C rating, translating to a Neutral in our POWR Ratings system. It is ranked #8 out of the 16 stocks in the  Telecom - Domestic category.

The three most significant dimensions for AT&T Inc. (T) per the POWR Ratings data appear to be Growth, Momentum, and Value.

Growth: This dimension sees a notable increase from July to December 2023. Starting at 79 in July, there is a slight dip to 62 by September, followed up by sharp growth across October and November to peak at 91 in November and December.

Momentum: The momentum dimension presents a clear upward trend from July to October 2023, starting from 16 in July, and steadily climbing to 69 by October. It dips slightly afterwards to 68 in November and further to 54 in December.

Value: The value dimension displays some fluctuations across the period. Its highest rating, at 68, is seen in August. Thereafter, it shows some gradual decline, ending at 58 in both November and December.

These temporal variations offer valuable insights into the expected performance of AT&T Inc. (T) along these three critical dimensions for investors.

How does AT&T Inc. (T) Stack Up Against its Peers?

Other stocks in the Telecom - Domestic sector that may be worth considering are Spok Holdings, Inc. (SPOK), InterDigital Inc. (IDCC), and Ooma Inc. (OOMA) -- they have better POWR Ratings.

What To Do Next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:

10 Stocks to SELL NOW! >

T shares were trading at $16.75 per share on Friday afternoon, up $0.01 (+0.06%). Year-to-date, T has declined -2.90%, versus a 26.13% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.


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