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Graham Griffin
Graham Griffin
Articles (107) 

AT&T Rises Above Revenue Predictions Despite Pandemic Struggles

Increased phone and media subscribers combat overall decline

October 22, 2020 | About:

Shares of AT&T Inc. (NYSE:T) were up over 5% after revenue reports surpassed analyst expectations on Wednesday.

For the third quarter, the wireless communication and entertainment company reported diluted earnings per share of 39 cents. Reported consolidated revenue was $42.3 billion, down from $44.6 billion in the year-ago quarter. However, revenue numbers exceeded Refinitiv analysts' expectations of $41.59 billion for the quarter.

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The higher-than-expected revenues came in part thanks to 645,000 new subscribers to AT&T's monthly phone plan. This came as a surpise as FactSet analysts were expeceting a loss of 9,000 customers. The company also reported equipment revenues higher than the year-ago quarter.

Adjusted earnings per share were also down at 76 cents compared to 94 cents a year ago. According to AT&T's news release, the company attributes 21 cents per share of earnings decrease to struggles with the pandemic. This decrease was due largely to the lack of professional sports and international roaming charges.

Another strong point during the quarter was the company's increasing focus on consumer entertainment with their HBO and HBO Max subscription services.

"We delivered a solid quarter with good subscriber momentum in our market focus areas of connectivity and software-based entertainment," AT&T CEO John Stankey said. "Wireless postpaid growth was the strongest that it's been in years with one million net additions, including 645,000 phones. We added more than 350,000 fiber broadband customers and are on track to grow our fiber base by more than 25% this year. And we continue to grow and scale HBO Max, with total domestic HBO and HBO Max subscribers topping 38 million, well ahead of our expectations for the full year."

The company is expecting free cash flow to hit $26 billion or higher for all of 2020, which will allow them to continue to invest in growth areas and pay down debt.

As of Oct. 22, shares were trading at $28.25, up 5.73%, with a market cap of $201.21 billion. The GF Value Line suggests the stock is currently fairly valued after seeing a large decrease due to the pandemic.

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Top gurus invested in AT&T include David Rolfe (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Mark Hillman (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio).

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Disclosure: Author owns no stocks mentioned.

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