What to Expect From AT&T Earnings

Telecom & Wireless

Published: January 27, 2015 12:40 pm

Last Updated: January 27, 2015 12:45 pm

AT&T Inc. (NYSE: T) will report its fourth-quarter earnings Tuesday after the markets close. Thomson Reuters has consensus estimates of $0.55 in earnings per share and $34.26 billion in revenue. In the same period of the previous year, AT&T posted $0.53 in earnings per share and $33.16 billion in revenue.

AT&T is expected to have capital spending of $18 billion or so in 2015. The company has another thing going for it: the highest dividend yield of all Dow stocks by far. This yield at least aims to keep investors happy. The problem here, on top of the endless price war among wireless carriers, is that AT&T is expected to post revenue growth of less than 3% for both 2014 and 2015. That being said, there are the DirecTV (NASDAQ: DTV) acquisition ambitions, followed by a smaller $2.5 billion acquisition of the Mexican wireless company Iusacell for $2.5 billion.

24/7 Wall St has included more on the outlook for AT&T in our bullish and bearish evaluation for 2015.

ALSO READ: Verizon’s Earnings Hampered by Competitive Pressure on Margins

The telecom giant is considered one of the safe-yield stocks to move into during a dangerous market. Both AT&T and Verizon Communications Inc. (NYSE: VZ) are in this category because each has an iron-clad balance sheet and yields above 4%, and they participate in one of the hottest sectors in America, wireless communications. Another advantage these companies hold is that their smaller competitors, Sprint Corp. (NYSE: S) and T-Mobile US Inc. (NASDAQ: TMUS), have made mixed progress in taking wireless market share from AT&T and Verizon. After all, price wars often leave no true winners.

24/7 Wall St. will be paying close attention to AT&T for any outlook changes for the dividend. That is not really an expected risk, but we are still awaiting updates on these pending mergers.

Just a day ahead of earnings, Canaccord Genuity maintained a Hold rating and set its price target at $34. This only implied an upside of 3.5%. The highest listed analyst price target was $40 and implied upside of 21.8%.

The 50-day moving average is currently at $33.44 and the 200-day moving average is $33.41. The moving averages have been largely immaterial to the stock’s movement, and both moving averages have been tested since the end of December.

ALSO READ: T-Mobile’s Ugly Future

Shares of AT&T were down 1% at $32.85 in the noon hour Tuesday. The stock has a consensus analyst price target of $34.86 and a 52-week trading range of $31.74 to $37.48.

AT&T shares have much more to consider than just their 52-week range. While $32 has been a floor in 2014, AT&T shares have been stuck in a trading range of $32 to just over $36 for most of the past three years. Also, its chart peak above $38 in early 2013 has been followed by a series of lower highs.

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