Its time to talk about $T otherwise known as AT&T and my thoughts on the stock and company.
Current Price: $29.90
52/Wk High: $39.70
52/Wk Low: $26.08
Read below for the breakdown.
Virtually everyone knows of the brand AT&T and many are loving the stock of late. Given the nice-looking dividend with a whopping 7% yield as well as an only growing market, the stock on the surface looks great.
AT&T made some major acquisitions over the years. First buying Direct TV for a substantial $49 billion. Then the company went on to Time Warner spending another $104 billion including debt.
Both were thought to be positive but their first acquisition is flailing and seems to have been a bad investment. In Q1 $T reported that Direct TV subscribers declined by one million, just after a 2019 loss of four million subscribers.
Not only that but COVID-19 slowed Warner Media growth as well. AT&T reported a slow down in the media acquisition, with Warner Media only reporting Q1 revenue of $7.4 billion versus the previous years $8.4 billion.
While the acquisitions were seen as great it has only hurt the company on the debt side of things. When last reported AT&T reported a huge $160 billion debt at the end of Q1 and then took out another loan for $5.5 billion in April to protect from COVID-19 headwinds.
The bad news does not stop either. AT&T CEO Randall Stephenson also stepped down a few weeks ago and was replaced today with John Stankey.
On the bright side the center of $T, their wireless business, continues to grow, and the company reported a Q1 YOY revenue growth of 2.5% in the sector.
Furthermore, to boost the wireless game, 5G is advancing and getting ready to boom, which will only be positive for AT&T.
Although there is some catalyst coming up, the financials are not so hot and the Q1 earnings represented that. AT&T reported a Q1 EPS miss of $0.840 versus the expected $0.848 EPS consensus. Revenue also came in low, at a considerable $42.8 billion.
AT&T on the other hand still has a considerable cash position of $9.955 billion, representing a 52.78% YOY increase.
While AT&T has plenty of negative headwinds, analysts are still bullish. Currently, the average price target is $34.41/share representing a 15.08% upside. Secondly, the high price target is $47.00/share, and the low is $24.00/share.
The big money is more fearful of the negative headwinds though. At the moment only 55.59% is owned by institutions. Top holders include Vanguard Group, Blackrock, and State Street Corp.
Finally, the negativity unfortunately does not stop. Recent reports show AT&T is looking to reduce debt and has considered the sale of the Warner Media gaming division as well as closing 250 stores. (fool.com)
In short, while the company does have an attractive dividend, I do not like the short and mid-term story. While I think the stock can go up long term, I believe there are much better names and profitable trades than in $T.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice simply opinion based on independent research.