AT&T Inc. (NYSE:T) was a relatively safe bet for income investors.
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It offered predictable cash flow with healthy dividend payouts and reasonable capital appreciation.
However, the T share has evolved a lot, as it has radically changed its financial structure and its overall strategy. Regardless of these changes, there remains a solid investment that will continue to reward the investor over the long term.
The T share has moved slowly over the past 12 months, with the share declining by 7%. Concerns about its spin-off, cut dividends and poor earnings are some of the reasons for its weakness.
Right now, it’s trading at a 13% discount to its average price targets. Plus, it trades at just 1.1 times futures sales. Therefore, the stock is trading at a good deal, and given its long-term potential, it makes an attractive investment.
AT&T had an impressive second quarter where it beat wireless subscriber estimates by a considerable margin. The results demonstrate the company’s progress in expanding its 5G goals.
Communications revenue was 6% due to higher sales of mobility and consumer wireline services. What’s more, WarnerMedia sales increased by an incredible 31%. Adjusted earnings of 89 cents per share topped consensus estimates of nine cents.
In addition, the company has witnessed a massive increase of 1.16 million among its wireless customers during the quarter, exceeding estimates by nearly four times. The number of wireless subscribers has increased in four consecutive quarters for AT&T.
In addition, the favorable winds the company is experiencing are quite robust and may help it post even better numbers in the second half of the year.
Additionally, with new iPhone releases expected by the end of this year, AT&T is expected to see a significant increase in revenue. As a result, the company has raised its earnings and revenue growth forecast for this year.
AT&T is splitting into three companies to reduce its massive debt load and unlock shareholder value. AT&T will only focus on 5G communications and broadband, while DIRECTV and Warner Bros. Discovery will focus on entertainment.
Discovery of Warner Bros. is a WarnerMedia spin-off starring Discovery (NYSE:SAY). The merger between the two entities will be finalized in mid-2022, and the combined entity will trade under the symbol WBD.
The reorganization is likely to scare off many of the company’s existing shareholders, however. When they receive their unknown WBD shares, they may look to sell.
The deal is likely to pay off in the long run for the company’s shareholders. WBD and the other two companies could perform better by focusing on their goals and strategies.
In addition, AT&T will receive $ 43 billion of the agreement to reduce its debt, allowing it to invest more cash in its telecommunications operations.
Final word on T Stock
The T-share is not what it used to be, but it is striving to unlock meaningful growth for its shareholder in the future.
It aims to reduce its debt and run a leaner business with separate entities focusing on their goals. His results indicate he is on the right track and ready for even better performance in the coming quarters.
Therefore, those who stay with the T-stock for the long haul will benefit immensely from the much-needed changes with its operations.
As of the publication date, Muslim Farooque does not have (directly or indirectly) any position on any of the titles mentioned in this article. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.
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