AT&T (T stock) on Thursday announced earnings and sales for the September quarter that were above projections. The company also added a greater number of cellular postpaid phone users than anticipated. The announcement caused a spike in the price of AT&T stock (NYSE:T).
AT&T’s profits were reported before the market opened. They did not include either WarnerMedia, which had been split off at the beginning of April, or DirecTV. The global telecom giant reported that its adjusted earnings from continuing operations for the third quarter were 68 cents, representing a 3% increase over the previous year. The revenue from ongoing activities came in at $30 billion, a decrease of 4.1%.
According to FactSet, industry analysts anticipated that AT&T would post earnings of 61 cents per share on revenue of $29.8 billion. AT&T had earned 66 cents a share on revenue of $39.9 billion a year earlier. Still, that figure included income from businesses that have since been terminated.
T Stock: Rapidly Increasing EBITDA Profits
According to Goldman Sachs analyst Brett Feldman, who was quoted in a report on the company’s financial performance, “the EPS beat was driven by higher adjusted EBITDA ($10.7 billion),” with T reporting a beat to EBITDA (earnings before interest, taxes, depreciation, and amortization) across all of its key segments. AT&T now anticipates that its adjusted earnings per share from continuing operations for the entire year would be $2.50 or higher, compared to its previous range of $2.42 to $2.46
In addition, AT&T (T stock) announced a free cash flow of $3.8 billion, less than the $4.4 billion expected by the market. AT&T, however, reaffirmed its projection that the company will have free cash flow in the range in 2022.
Approximately 14 billion dollars. According to Craig Moffett, an analyst at MoffettNathanson, who was quoted in a report, this is a decrease from the initial projection of $20 billion.
In a study, Moffett stated that AT&T needed to provide “a clear route to deleveraging their financial sheet.” “Deleveraging demands either a faster retirement of debt or a higher rise in EBITDA,” It’s true that EBITDA growth picked up, and it was only one of a number of positive developments in today’s (Q3) earnings report, but the rate at which debt is being paid down is still slower than one might want.
Moffett continued by saying, “All of this helps to explain why AT&T is allegedly searching for financial partners to help fund their consumer wireline fiber expansion.” The construction of fiber optic networks is at the core of AT&T’s business strategy. However, the amount of money must be spent on capital expenditures is immense, and the payback times are excruciatingly prolonged.
During today’s morning trading on the stock market, AT&T shares increased by 8.8% to a price of about 16.90.
Wireless Subscriber Counts Beat Estimates, According to AT&T Stock
In addition, the business reported that it increased its number of wireless postpaid phone users by 708,000, which is significantly more than the projection of a gain of 552,000. In the previous year, it had gained 928,000 users to wireless postpaid phone services. Those who subscribe to a “postpaid” service typically have unlimited monthly data plans.
The revenue generated from wireless services increased by 5.4% to a total of $15.3 billion, narrowly above analysts’ expectations of $15.2 billion.
In addition, AT&T gained 338,000 customers to its fiber internet service, above the expectations of AT&T stock analysts, which were 330,000 customers.
Prior to the release of the earnings report, the price of AT&T shares had dropped by 15% so far in 2018. According to IBD Shares Checkup, AT&T stock had a Relative Strength Rating of 29 out of a maximum of 99 prior to the release of the company’s quarterly earnings announcement.
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Author Valerie Remorosa