In the afterglow of its lucrative merger with Time Warner, a cluster of top directors and key executives at AT&T (T, Financial) jumped on nearly $8 million worth of shares of the telecommunications giant, new GuruFocus disclosures showed.
The handful of insiders, including AT&T’s lead director, paid an average of $30.65 a share for a collective of more than 257,000 shares. The trades were conducted just a week ago, when the company released its second-quarter results, disclosures collected by GuruFocus showed.
So far, the insiders have gained an estimated 4.24% on their investment. The stock was priced at nearly $32 a share in Thursday trading, up 0.14%. Year to date, the stock is down 17%. The GuruFocus median price-sales chart shows the stock on Thursday afternoon traded below its historical value of $46.30 a share. Peter Lynch's chart also showed a trade price that was below fair value.
The flurry of trading activity represents a spike in direct purchases of stock in the telecommunications giant by insiders. The buys were in the range of 4,000 shares to more than 64,000 shares.
Most of the buys were made on the open market by the company’s directors.
AT&T Director Joyce Roche, the president and CEO of Girls Inc., the nonprofit that provides inspiration for girls, purchased a number of direct shares. While at Avon, she became the first African-American female vice president. Roche bought 3,200 shares of the telecommunications giant on July 27. In total, Roche owned about 11,860 direct shares following the direct purchase last week.
AT&T Director Richard Fisher, the former president and CEO of the Federal Reserve Bank of Dallas, bought 7,400 shares on July 27. He held 10,000 shares following the direct purchase last week.
Director Geoffrey Yang is the founding partner and managing director of a venture capital firm. Yang purchased 32,350 shares on July 26. He owned more than 170,000 indirect shares following the direct purchase last week.
AT&T Lead Director Matthew Rose bought 65,500 shares and owned more than 98,100 direct shares following the direct purchase last week. Rose is CEO of Burlington Northern Santa Fe.
Other buys were executed by directors Michael McCallister, Beth Mooney and Scott Ford. AT&T’s CEO of Communications, John Donovan, also bought a total of almost 28,000 shares on the open market.
AT&T may be among the most commonly traded stocks on Wall Street. In recent years, however, the global telecommunications company has had its struggles, including an underperforming stock and fall in revenues as people cut their cable and other programming to embrace internet streaming media providers such as Netflix (NFLX). It experienced a stock decline of 10% in the last five years. The company also saw revenues drop in 2018 from the prior year.
It has had lackluster earnings over the years. It reported an average earnings growth of 4% per year over the last five years. The same number is 1.6% over the last decade. In 12 months, its revenue growth is down -2.9%.
GuruFocus also identified several warnings signs that compromise the company's financial health and long-term growth and profitability.
The telecommunications giant has issued more than $32 billion in long-term debt over three years. Its gross margins have been in a long-term decline. The average rate of decline has been -2.4% a year.
The company’s rate of growth in assets has far exceeded its revenue growth rate. It has built assets at 10% a year compared to its annual growth rate of 3.4% over the past five years, GuruFocus showed.
The company has a Piotroski F-Score of 4, which suggests average business operations.
AT&T is the leader in terms of market value in the communication services sector. It holds 22.7% of the industry, based on the GuruFocus industry overview page. It is followed by Verizon (VZ, Financial), which makes up 20.9% of the industry, and Comcast Corp. (CMCSA, Financial), which holds 15.6%.
In the afterglow of the merger, AT&T has produced some worthwhile metrics. It is trading at 6.26 times price-earnings, which is ranked higher than 90% of its peers. It is also trading at 9.07 times forward price-earnings, which is also in the top 10% of performers.
The dividend yield is 6.21%, among the highest in the industry or higher than 71% of its peers. It has a payout of 40% of earnings.
Revenue is estimated to reach more than $185 billion in 2020. Its earnings before interest, taxes, depreciation and amortization, or EBITDA, is expected to hit $56 billion in 2020.
The Peter Lynch chart shows it is trading below its fair value.
The company has a market cap of $232 billion.
- CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
- Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
- Double Buys:: Companies that both Gurus and Insiders are buying
- Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.