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T Stock Before Q1 Earnings: A Smart Buy or Risky Investment?
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AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2025 earnings on April 23, before the opening bell. The Zacks Consensus Estimate for revenues and earnings is pegged at $30.43 billion and 52 cents per share, respectively. The earnings estimate for AT&T for 2025 has remained unchanged at $2.14 per share over the past 60 days, while the same for 2026 has decreased marginally to $2.26 from $2.27.
Image Source: Zacks Investment Research
Earnings Surprise History
The communications service provider delivered a four-quarter earnings surprise of 4.06%, on average. In the last reported quarter, the company pulled off an earnings surprise of 12.5%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for AT&T for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AT&T currently has an ESP of -7.24% and a Zacks Rank #3.
During the quarter, AT&T inked a multiyear expansion deal with Nokia to streamline network services, improve automation, expedite deployment times, and enhance operational efficiency.
AT&T also successfully demonstrated and tested 1.6 Tbps Data Transport across 296 kilometers of its long-distance fiber network. Network traffic growth is expected to increase substantially in the upcoming years. The company’s effort expands its network capacity to support high bandwidth intensive use cases is a positive.
In the to-be-reported quarter, AT&T introduced SplitPay to ease the bill payment process for customers. It was a common hassle for clients using a shared wireless plan to decide who pays what amount. AT&T’s new product streamlines that process. The company also introduced AT&T’s Connected Spaces Smart IoT Sensor Kit. The product enables small and medium businesses to take advantage of IoT technology without much in-house expertise.
In the March quarter, AT&T reinforced its focus on the customer-centric business model by promising to pay bill credits for any network outage across its wireless and fiber networks for consumers and small businesses. The first-of-its-kind industry initiative, dubbed AT&T Guarantee, aims to maintain customer loyalty and win back trust after the carrier faced severe backlash for a nationwide wireless service outage last year. It is also collaborating with TransUnion to improve customer experiences with branded calling services.
The Zacks Consensus Estimate for revenues from the Communications segment, which accounts for the lion’s share of total revenues, is pegged at $29.33 billion, while our model projects revenues of $29.52 billion.
However, AT&T’s Business Wireline division is plagued by persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Our model estimate indicates a revenue of $4.6 billion from Business Wireline, indicating a 6.1% decline year over year. Macroeconomic headwinds and fierce competition from Verizon and T-Mobile are major concerns.
Price Performance
Over the past year, AT&T has gained 63.6% compared with the industry’s growth of 44.2%, outperforming peers like Verizon Communications Inc. (VZ - Free Report) and T-Mobile US, Inc. (TMUS - Free Report) .
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, AT&T appears to be trading relatively cheaper than the industry but well above its mean. Going by the price/earnings ratio, the company shares currently trade at 12.46 forward earnings, lower than 14.13 for the industry but well above the stock’s mean of 8.16.
Image Source: Zacks Investment Research
Investment Considerations
AT&T expects to continue investing in key areas and adjust its business according to the evolving market scenario to fuel long-term growth, while maintaining a healthy dividend payment. With a customer-centric business model, AT&T is witnessing healthy momentum in its postpaid wireless business with a lower churn rate and increased adoption of higher-tier unlimited plans. It has been steadily advancing its capability to provide faster and more reliable connectivity and support a wide range of emerging use cases such as augmented reality, virtual reality, AI applications, cloud computing and others.
Despite a robust cash flow position and the company’s effort to drive shareholder value, high debt obligations are a headwind. It can make the company more vulnerable to economic downturn and undermine growth initiatives. Amid intensifying competition with T-Mobile and Verizon, the company’s effort to woo customers with healthy discounts, freebies and cash credits is putting greater strain on margins. Additionally, spectrum crunch in the U.S. Telecom industry, combined with rising data traffic stemming from online mobile video streaming, cloud computing and video conferencing services, is another concern.
End Note
With a Zacks Rank #3, AT&T appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. Stiff competition and higher spending on promotional offers are putting pressure on profitability.
However, the results of a single quarter are not so vital for long-term stakeholders. Investors who already own the stock may consider holding on to it, as healthy cash flow, improving broadband connectivity for both enterprise and consumer markets, steady 5G deployments bodes well for long term growth.
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T Stock Before Q1 Earnings: A Smart Buy or Risky Investment?
AT&T Inc. (T - Free Report) is scheduled to report first-quarter 2025 earnings on April 23, before the opening bell. The Zacks Consensus Estimate for revenues and earnings is pegged at $30.43 billion and 52 cents per share, respectively. The earnings estimate for AT&T for 2025 has remained unchanged at $2.14 per share over the past 60 days, while the same for 2026 has decreased marginally to $2.26 from $2.27.
Image Source: Zacks Investment Research
Earnings Surprise History
The communications service provider delivered a four-quarter earnings surprise of 4.06%, on average. In the last reported quarter, the company pulled off an earnings surprise of 12.5%.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for AT&T for the first quarter. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
AT&T currently has an ESP of -7.24% and a Zacks Rank #3.
You can see the complete list of today’s Zacks #1 Rank stocks here.(See the Zacks Earnings Calendar to stay ahead of market-making news.)
Factors Shaping the Upcoming Results
During the quarter, AT&T inked a multiyear expansion deal with Nokia to streamline network services, improve automation, expedite deployment times, and enhance operational efficiency.
AT&T also successfully demonstrated and tested 1.6 Tbps Data Transport across 296 kilometers of its long-distance fiber network. Network traffic growth is expected to increase substantially in the upcoming years. The company’s effort expands its network capacity to support high bandwidth intensive use cases is a positive.
In the to-be-reported quarter, AT&T introduced SplitPay to ease the bill payment process for customers. It was a common hassle for clients using a shared wireless plan to decide who pays what amount. AT&T’s new product streamlines that process. The company also introduced AT&T’s Connected Spaces Smart IoT Sensor Kit. The product enables small and medium businesses to take advantage of IoT technology without much in-house expertise.
In the March quarter, AT&T reinforced its focus on the customer-centric business model by promising to pay bill credits for any network outage across its wireless and fiber networks for consumers and small businesses. The first-of-its-kind industry initiative, dubbed AT&T Guarantee, aims to maintain customer loyalty and win back trust after the carrier faced severe backlash for a nationwide wireless service outage last year. It is also collaborating with TransUnion to improve customer experiences with branded calling services.
The Zacks Consensus Estimate for revenues from the Communications segment, which accounts for the lion’s share of total revenues, is pegged at $29.33 billion, while our model projects revenues of $29.52 billion.
However, AT&T’s Business Wireline division is plagued by persistent losses in access lines as a result of competitive pressure from voice-over-Internet protocol (VoIP) service providers and aggressive triple-play (voice, data, video) offerings by the cable companies. Our model estimate indicates a revenue of $4.6 billion from Business Wireline, indicating a 6.1% decline year over year. Macroeconomic headwinds and fierce competition from Verizon and T-Mobile are major concerns.
Price Performance
Over the past year, AT&T has gained 63.6% compared with the industry’s growth of 44.2%, outperforming peers like Verizon Communications Inc. (VZ - Free Report) and T-Mobile US, Inc. (TMUS - Free Report) .
Image Source: Zacks Investment Research
Key Valuation Metric
From a valuation standpoint, AT&T appears to be trading relatively cheaper than the industry but well above its mean. Going by the price/earnings ratio, the company shares currently trade at 12.46 forward earnings, lower than 14.13 for the industry but well above the stock’s mean of 8.16.
Image Source: Zacks Investment Research
Investment Considerations
AT&T expects to continue investing in key areas and adjust its business according to the evolving market scenario to fuel long-term growth, while maintaining a healthy dividend payment. With a customer-centric business model, AT&T is witnessing healthy momentum in its postpaid wireless business with a lower churn rate and increased adoption of higher-tier unlimited plans. It has been steadily advancing its capability to provide faster and more reliable connectivity and support a wide range of emerging use cases such as augmented reality, virtual reality, AI applications, cloud computing and others.
Despite a robust cash flow position and the company’s effort to drive shareholder value, high debt obligations are a headwind. It can make the company more vulnerable to economic downturn and undermine growth initiatives. Amid intensifying competition with T-Mobile and Verizon, the company’s effort to woo customers with healthy discounts, freebies and cash credits is putting greater strain on margins. Additionally, spectrum crunch in the U.S. Telecom industry, combined with rising data traffic stemming from online mobile video streaming, cloud computing and video conferencing services, is another concern.
End Note
With a Zacks Rank #3, AT&T appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. Stiff competition and higher spending on promotional offers are putting pressure on profitability.
However, the results of a single quarter are not so vital for long-term stakeholders. Investors who already own the stock may consider holding on to it, as healthy cash flow, improving broadband connectivity for both enterprise and consumer markets, steady 5G deployments bodes well for long term growth.