T-Share: AT&T Earnings, Full Year Free Cash Flow Best Estimates

AT&T (T) early Wednesday reported fourth-quarter earnings that beat estimates while revenue fell just short of Wall Street targets. T-shares exploded and moved into a buy zone, while free cash flow for the full year was hemmed in by the company’s own outlook.


Reported before the market opened, AT&T revenues did not include WarnerMedia, which was spun off in early April 2022. The telecom giant said its fourth-quarter adjusted profit from continuing operations was 61 cents, up 9% from a year earlier. Revenue from continuing operations increased 0.8% to $31.3 billion.

Analysts had forecast AT&T earnings of 57 cents per share on revenues of $31.4 billion, according to FactSet. A year earlier, AT&T earned 56 cents a share on $40.96 billion in revenue, but that included the sale of discontinued operations.

T Stock: 2023 Free Cash Flow Outlook

In addition, AT&T reported full-year free cash flow of $14.1 billion, beating analyst estimates of $13.78 billion. AT&T had forecast free cash flow of $14 billion. In the fourth quarter, AT&T generated $6.1 billion in free cash flow, beating estimates of $5.37 billion.

For fiscal 2023, AT&T projected free cash flow of $16 billion versus Wall Street estimates of $16.2 billion. Free cash flow growth supports AT&T’s dividend.

“We view AT&T’s fairly conservative $16 billion 2023 FCF guide, including $24 billion in capital expenditures, as the key takeaway from the pressure,” Well Fargo analyst Eric Luebchow said in a report.

He added: “With a ‘$16 billion or better’ outlook, AT&T has released a guide that we believe is quite conservative – with upside potential – including EBITDA growth. Capital expenditures are expected to moderate in 2024 and beyond Importantly, this implies that the dividend payout ratio is just over 50%, which offers a lot of financial flexibility.”

The telecom said it expects 2023 adjusted earnings of $2.40 per share in the middle of its outlook. That includes a negative 25 cent impact from higher interest rates and taxes. Also, for 2023, T-share analysts had forecast earnings of $2.56 per share on revenue of $122.8 billion.

AT&T has not provided a revenue forecast for 2023.

In today’s stock market, the T-share soared 6.3% to 20.36 in morning trading. Equities have an entry point of 19.62.

Postpaid phone subscribers Top views

Also, the company said it added 656,000 postpaid wireless phone customers during the quarter, versus estimates for a gain of 645,000.

But AT&T added 280,000 fiber broadband subscribers and missed analyst views for 330,000.

T-shares were up 4% year-to-date ahead of the earnings report. Heading into the AT&T earnings report, stocks had a Relative Strength Rating of 62 out of the best possible 99, according to IBD Stock Checkup.

WarnerMedia broke up in early April 2022 and merged with Discovery. The new media company is called Warner Bros. Discovery (WBD). WBD shares are up 40% in 2022.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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