As news began to fly earlier this week surrounding the renewed possibility of a T-Mobile US Inc (NASDAQ:TMUS) and Sprint Corp (NYSE:S) merger, other wireless companies and investors took note. A deal between two of the largest U.S. wireless carriers has the potential to shake up the entire industry.
Though the deal is still reportedly weeks away from being completed and is certainly not a lock, investors are likely waiting with great anticipation to see what comes of this possible mega-merger.
AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ), the second and first largest carriers in the U.S., might not be worried about a potential merger just yet, but investors are likely starting to consider the possible ramifications a stronger third competitor could have on both companies.
For now, let’s take a look at the two biggest U.S. wireless carriers and their fundamentals to help investors, who might soon have to weigh their options more heavily, decide which stock is the best investment right now.
AT&T Inc. (T)
AT&T is the second-largest wireless carrier in the U.S., but its stock price has fluctuated greatly over the last year. Shares of AT&T now rest almost $5 below their 52-week high of $43.03 per share.
In AT&T’s second quarter, the company beat Wall Street expectations, posting earnings of $0.79 per share and revenues of $39.84 billion. The company’s revenues dipped slightly from last year, but the wireless carrier’s earnings experienced growth. AT&T is currently a Zacks Rank #3 (Hold) stock, but it sports an “A” grade for Value in our Style Scores system, as well as an overall VGM grade of “B.”
What’s more, many key figures support the stock’s “A” grade for Value. The company’s 3.05 PEG ratio matches the industry average, and its P/B ratio of 1.86 also hovers right around the “Wireless National” industry norm. AT&T stock is currently trading at 12.93x earnings, which is stellar compared to the overall market and looks even more favorable against the average of 35x earnings posted by its industry peers.
AT&T’s 16.42% cash flow growth also helps to show that the company is on a solid growth trajectory, especially compared to the industry’s nearly double-digit decline. However, the stock has slumped 5.27% over the past year. Furthermore, its sales numbers are projected to fall slightly this quarter and for the full-year, based on our current consensus estimates.
Within the past 60 days, AT&T has received mixed revisions for its current quarter earnings estimates, with six positive revisions and eight negative revisions. For AT&T’s full year estimates, there have been 15 upward revisions within the last 60 days, compared to four downward revisions.
However, AT&T’s earnings are expected to climb 2.28% this quarter and gain 4.08% for the year to hit $2.93 per share. AT&T has only missed earnings expectations once in the last 11 quarters.