AT&T: Keep T Stock on Hold

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With Apple’s (AAPL) new iPhone 6 announcement and a possibility of Wi-Fi calling, times ahead are uncertain for AT&T (T). Do AT&T’s metrics make it worthy of a recommendation?

Company Overview

at&t t stockAT&T is the telecom titan that can trace its roots back to Alexander Graham Bell and the Bell Telephone Company. For nearly a hundred years, AT&T enjoyed a monopoly over phone service in the U.S. While the government forced a breakup of the company in 1984, AT&T still remains a market leader to this day.

Earnings Summary and Industry Buzz

Back in July, AT&T announced its second quarter earnings, and while its customer turnover was strong, AT&T did miss analysts’ earnings expectations. AT&T’s net income dipped 7.2%. While revenue was up by 1.6% totaling $32.6 billion, analysts estimated $33.2 billion.

AT&T’s turnover rate was most impressive at 0.86% for post-paid subscribers, and AT&T added one million new subscribers. AT&T expects to maintain its low turnover rate.

AT&T’s strong point is its solid dividend yield of 5%, which is great for investors. AT&T also expects increased revenue as more customers move to its newer plans, and AT&T anticipates an added boost in bundling with the acquisition of DirectTV.

With the announcement of the iPhone 6, there is buzz that AT&T may start offering Wi-Fi calling. When Apple announced that the new iPhone supported Wi-Fi calling, competitor T-Mobile was the only U.S. carrier that was shown to have the option available.

With the acquisition of DirectTV and talks of updates in calling plans, AT&T expected to have stronger growth in the third quarter.

Current Ratings

T currently receives a “C” for its Quantitative Grade, which is up from the last time I reviewed AT&T stock.

AT&T could stand to improve its financial metrics: Sales growth, earnings growth, earnings surprises, cash flow, and analysts revisions are all “Cs” or “Ds.” AT&T’s earnings momentum could use the most improvement as it’s receiving an “F.”

As mentioned before, AT&T expected to have a stronger third quarter. Meanwhile, it earns “As” on operating margin growth and return on equity. AT&T receives a “B” for its Fundamental Grade.

As of Sept. 19, I consider T a “C-rated hold.” With solid dividend yield, AT&T is a good “hold” if you already own shares, but I would not recommend entering T stock with new money at this time.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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