Stock Update (NYSE:T): AT&T Inc. Reports Double-Digit Growth

AT&T Inc. (NYSE:T) reported double-digit revenue, adjusted operating margin, adjusted EPS and free cash flow growth in the third quarter.

“We now have integrated solutions that are unlike any competitor in the market,” said Randall Stephenson, AT&T chairman and CEO. “With our national wireless and video capabilities, as well as our extensive broadband network, we now have assets that make us a unique competitor and the first scaled, fully-integrated U.S. service provider.

“We turned in outstanding financial results in the quarter. Our early integration efforts with DIRECTV are going very well and we’ve just begun to scratch the surface on the video, wireless and broadband cross-selling opportunities,” Stephenson added.

Consolidated Financial Results

AT&T’s consolidated revenues for the third quarter totaled $39.1 billion, up nearly 19% versus the year-earlier period largely due to the acquisition of DIRECTV. Compared with results for the third quarter of 2014, operating expenses were $33.2 billion versus $27.4 billion; operating income was $5.9 billion versus $5.6 billion; and operating income margin was 15.2%, down from 17.0% in the year-ago quarter. When adjusting for amortization, merger and integration-related items, and other expenses, operating income was $7.9 billion versus $5.9 billion; and operating income margin was 20.3%, up 250 basis points from a year ago.

Third-quarter 2015 net income attributable to AT&T totaled $3.0 billion, or $0.50 per diluted share, compared to net income of $3.1 billion, or $0.60 per diluted share in the year-ago quarter. Adjusting for $0.13 of amortization costs, $0.05 of merger and integration-related items, $0.03 of Cricket network decommissioning and $0.03 of other expenses, earnings per share was $0.74 compared to an adjusted $0.65 in the year-ago quarter, an increase of nearly 14%.

Cash from operating activities totaled $10.8 billion in the third quarter and $26.7 billion year to date; and capital expenditures totaled $5.3 billion and $13.9 billion year to date. Free cash flow — cash from operating activities minus capital expenditures — totaled $5.5 billion for the quarter and $12.8 billion year to date, an increase over the year-ago quarter even as the company continues to invest in its high-quality networks and in its customers.

The free cash flow dividend payout ratio was 57% year to date, improved from 67% in the second quarter.

Updated Outlook

The company also is increasing its adjusted EPS and free cash flow outlook for the year. For the full year, AT&T now expects adjusted EPS in the $2.68 to $2.74 range and free cash flow in the
$15 billion range or better. (Original Source)

Shares of At&t are up 2% to $34.95 in after-hours trading. T has a 1-year high of $36.45 and a 1-year low of $30.97. The stock’s 50-day moving average is $32.54 and its 200-day moving average is $33.27.3

On the ratings front, At&t has been the subject of a number of recent research reports. In a report issued on October 16, Nomura analyst Jeff Kvaal initiated coverage with a Buy rating on T and a price target of $39, which represents a potential upside of 16.6% from where the stock is currently trading. Separately, on September 30, UBS’s John Hodulik reiterated a Buy rating on the stock and has a price target of $42.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeff Kvaal and John Hodulik have a total average return of 12.5% and 20.8% respectively. Kvaal has a success rate of 53.3% and is ranked #438 out of 3795 analysts, while Hodulik has a success rate of 84.8% and is ranked #216.

Overall, 2 research analysts have assigned a Hold rating and 7 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $38.25 which is 14.3% above where the stock opened today.


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