AT&T Inc T shares are trading lower by roughly 1% to $21.55 Tuesday. Traders and investors are also watching for the company’s third-quarter earnings report, which is confirmed for Wednesday’s pre-market session.
According to analyst consensus estimates for the third quarter, AT&T is expected to report EPS of 57 cents on revenue of $30.44 billion.
What To Know: Investors will be keen to see if AT&T can deliver on its guidance for the full fiscal year, which includes wireless service revenue growth in the 3% range and broadband revenue growth of more than 7%.
The company in its second-quarter earnings release reiterated its expectations for adjusted EPS of $2.15 to $2.25 for the year and free cash flow in the range of $17 billion to $18 billion.
In the second quarter, AT&T reported operating revenues of $29.8 billion, a slight year-over-year decline of 0.4% that narrowly missed analyst expectations of $29.9 billion.
Despite the revenue miss, the company's adjusted EPS of 57 cents was in line with estimates, providing some stability for investors, and leading to a post-earnings stock price gain.
AT&T's Mobility segment, which continues to be a growth engine for the company, added 997,000 wireless net subscribers in the second quarter, a significant beat over estimates. This included 419,000 postpaid phone net additions, which comfortably surpassed analyst expectations of 279,000.
The telecom giant's strategy to target budget-conscious consumers appears to be paying off, as postpaid churn improved to 0.85%, down from 0.95% a year ago.
Consumer Services In Focus: AT&T's Fiber broadband performance in the Consumer Wireline segment was a mixed bag for the second quarter. The company added 239,000 AT&T Fiber subscribers, falling short of analyst estimates of 253,000.
In a more promising development, AT&T's Internet Air service garnered 139,000 net additions, adding another layer to the company's broadband expansion efforts.
In terms of profitability, AT&T’s adjusted EBITDA rose to $11.3 billion from $11.1 billion a year ago, reflecting slight growth in operating performance. The Mobility segment's operating income increased 1.6% year-over-year to $6.72 billion, with an operating margin of 32.8%, up from 32.6% in the same period last year.
On the capital expenditure front, AT&T spent $4.4 billion in second quarter, demonstrating its continued focus on network expansion, particularly in 5G and fiber infrastructure. The company generated $9.1 billion in operating cash flow, a decrease from the $9.9 billion it posted a year ago.
Free cash flow improved to $4.6 billion from $4.2 billion in the prior year, supported by careful expense management. The improvement in free cash flow is significant, given the company's generous 6.10% dividend yield, which remains a key attraction for income-focused investors.
What Else: As AT&T approaches its third quarter results Wednesday, the key questions for investors will revolve around the company's ability to sustain subscriber growth in its Mobility segment, address the ongoing challenges in the Business Wireline division and continue its push to expand fiber broadband coverage.
Shareholder returns, supported by robust free cash flow, will also remain in focus, as the company balances its investment in network capabilities with maintaining its attractive dividend yield.
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How To Buy T Stock
By now you're likely curious about how to participate in the market for AT&T, be it to purchase shares or even attempt to bet against the company.
Buying shares is typically done through a brokerage account. You can find a list of possible trading platforms here. Many will allow you to buy “fractional shares,” which allows you to own portions of stock without buying an entire share. For example, some stock, such as Berkshire Hathaway or Amazon.com, can cost thousands of dollars to own just one share. However, if you only want to invest a fraction of that, brokerages will allow you.
In the case of AT&T, which is trading at $21.55 on Tuesday at publication, $100 would buy you 4.67 shares of stock.
If you're looking to bet against a company, the process is more complex. You'll need access to an options trading platform, or a broker who will allow you to “go short” a share of stock by lending you the shares to sell. The process of shorting a stock can be found at this resource.
Otherwise, if your broker allows you to trade options, you can either buy a put option, or sell a call option at a strike price above where shares are currently trading — either way it allows you to profit off of the share price decline.
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