Investors have eagerly waited for 2022 Q2 results. Now that earnings season has officially kicked off, they’ll get their wish with a multitude of companies reporting each week.
Q1 wasn’t pleasant, to say the least. We witnessed deep valuation slashes following many quarterly reports, not typically what we’re used to during earnings season.
One company slated to release quarterly results before the opening bell on Thursday is the widely-followed AT&T
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AT&T is North America’s second-largest wireless service provider and one of the world’s leading communications service carriers. In addition, the company resides in the Zacks Wireless National Industry, which has a year-to-date return of 6.5%.
Let’s take a closer look to see how the company shapes up heading into its quarterly report.
Share Performance & Valuation
AT&T shares have been a bright spot in a dim market year-to-date, increasing by more than 15% in value and outperforming its Zacks Industry by a wide margin.
Image Source: Zacks Investment Research
In fact, AT&T has outperformed its Zacks Industry not just year-to-date but over the last year as well.
Image Source: Zacks Investment Research
The relatively strong price action is undoubtedly a positive, reflecting that the bulls have remained in control for some time now.
AT&T also sports rock-solid valuation metrics, further displayed by its Style Score of an A for Value. Its 8.3X forward earnings multiple is nicely underneath its five-year median of 9.2X and is nowhere near highs of 13.5X in 2017.
In addition, it reflects a steep 31% discount relative to its Zacks Industry.
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Quarterly Performance & Share Reactions
AT&T has primarily posted bottom-line results above expectations, exceeding the Zacks Consensus EPS Estimate in seven of its previous ten quarters. In its latest quarter, the company missed on the bottom-line by a marginal 1.3%.
However, top-line results have been mixed; AT&T has exceeded quarterly revenue estimates in five of its previous ten quarterly reports. The chart below illustrates the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
Shares are generally volatile following quarterly reports; over its last five EPS beats, shares have moved downwards three times, all by at least 1.5%.
Growth Estimates
Analysts have been overwhelmingly bearish over the last 60 days, with four of the five estimate revisions being downwards and, in turn, pushing the Consensus Estimate Trend down nearly 4%.
Image Source: Zacks Investment Research
Additionally, the Zacks Consensus Estimate of $0.59 per share pencils in a disheartening 33% drop in quarterly earnings year-over-year.
AT&T is forecasted to generate $29.3 billion in revenue for the quarter, reflecting a 33% decrease in quarterly revenue from year-ago sales of $44.1 billion.
Dividends
Earlier in 2022, in a move that investors didn’t appreciate, the company slashed its dividend nearly in half and got kicked out of the elite Dividend Aristocrat group.
However, the company’s annual dividend yields a sizable 5.4% and is still well above the S&P 500’s annual dividend yield of 1.7%.
Image Source: Zacks Investment Research
Bottom Line
AT&T’s share performance year-to-date is undoubtedly a massive highlight that investors should note. Additionally, the company sports solid valuation levels and still pays a hefty dividend.
However, the company is a Zacks Rank #4 (Sell), the top and bottom-line are forecasted to shrink by double-digit percentages year-over-year, and analysts have dialed back their earnings estimates notably over the last 60 days.
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