Before the opening bell on Monday, AT&T Inc. (T, Financial) issued third-quarter results.
Shares were trading higher 2.14% during premarket to around $37.70, despite the Dallas-based worldwide provider of telecommunication, media and technology services missing consensus estimates by 22 cents on GAAP earnings, having posted 50 cents per share. The result was 23% lower year over year.
Third-quarter revenue also declined from the previous year by 2.5% to $44.58 billion, falling $490 million short of expectations, which was mainly attrubuted to an underperforming WarnerMedia segment. AT&T Inc. has included WarnerMedia in its portfolio following the acquisition of Time Warner Inc. in mid-June 2018 for $108.7 billion.
Total operating revenues from Communication went down 1.7% to $35.4 billion, while WarnerMedia decreased 4.4% to $7.85 billion. Latin America revenue dropped 5.6% to $1.73 billion. In contrast, Xandr, which is the advertising and analytics division of AT&T, was up 13.3% to $504 million. Through Xandr’s online platform Community, the company buys and sells customer-focused digital advertising.
After thorough examination, the company will monetize those non-core assets that don’t deserve to remain in its portfolio. It is planning to make $14 billion cash in 2019 and $5-$10 billion cash in 2020 from peripheral activities.
Moreover, cash flows from operating activities were $11.4 billion and capital expenditures totaled $5.2 billion. Therefore, the free cash flow was $6.2 billion in the third quarter of 2019.
Looking ahead to full-year 2020, AT&T Inc. targeted 1-2% revenue growth versus analysts’ projections for flat revenue, year over year. The company expects pro forma earnings per share to fall in the $3.60 - $3.70 range compared to earnings per share average estimate of $3.62.
AT&T Inc.’s stock price increased 29% so far this year to close at $36.9 on Friday for a market capitalization of $269.70 billion.
The 52-week range is $26.8 to $38.75.
On Nov. 1, the company will pay a cash quarterly dividend of 51 cents per common share to its shareholders, producing a 5.53% forward dividend yield according to Friday’s closing price.
The stock has an overweight recommendation rating with an average target price of $36.30.
Disclosure: I have no positions in any security mentioned.
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