Is AT&T a Good Stock to Buy?

Is AT&T a Good Stock to Buy? One of the most well-known wireless phone providers in the United States is AT&T (T). When stock markets become erratic, the telecom and media giant can be seen as a haven and makes for a strong defensive move.

In a setting with relatively low-interest rates, AT&T also keeps its dividend yield at a healthy 6 percent yearly. Are investors advised to buy AT&T stock? Is AT&T a stock to buy?

Why AT&T?

Because of the pressure on the stock market, which is currently in an uptrend, now is not the greatest moment to buy a lot of companies, but it is still a good time to make conservative investments and choose the best candidates for your watchlist. Investors should look for top stocks that are beating the market in top industry categories.

The current price AT&T is $18.35 with market capitalization of $130.76 Billion. It is a low range stock that any level of investor can consider it. Whether you are a beginner or an experienced investor, AT&T (T) has a great potential to deliver. This is quite a right time to buy this stock as it keeps soaring.

Top Features of the Company Stock

• Highly popular dividend stock

• Partnered with Warner Bros

• The stock soared high in 2022

• High Payouts

• The firm has a wide range of businesses

AT&T Technical Analysis

AT&T buy or sell? Technical analysis of the stock gives you the idea to take the right action (buy or sell) at the right time. On July 21, the firm announced its second-quarter earnings, which resulted in a nearly 8% daily decline in share price.

• A significant downside is that the most recent earnings announcement dropped shares below their 50-day and 200-day lines. Investors should preferably look for stocks that are trading above their moving average support levels.

Over the previous few months, the stock had been rising as investors preferred recession-resistant businesses. However, investors' extremely negative response to the presentation of the second quarter's earnings on July 21 led to a gap down in high volume.

• After this sell-off, the stock will need to undergo some maintenance; ideally, a new base and purchase point will be rebuilt before it is ready for action. The stock would then have a point to break out from. In the midst of the recent downturn, the stock's relative strength line has also significantly retreated.

• The Relative Strength Rating for AT&T stock remains below the required minimum of 80 for portfolio candidates, at 61, which is less than desirable. The S&P 500 is used as the benchmark for calculating the RS line for a stock. When a stock breaks out, an RS line should ideally be at or close to a new high.

AT&T Merger

AT&T agreed to combine its WarnerMedia and Discovery (DISCA) businesses in 2021. In a merger that might be finalised during the second quarter, the wireless service provider intended to combine its WarnerMedia division with Discovery.

The first-quarter financial results for AT&T were very erratic due to recent spin-offs and divestitures. But its primary wireless business is still expanding.

Warner Bros. Discovery (WBD) stock will result from the merger of the WarnerMedia group and Discovery. Early in the second quarter, trading for Warner Bros. Discovery is predicted to begin. Stockholders of Discovery will own 29% of the new business, while AT&T shareholders will possess 71%.

Less spectacular results were achieved by AT&T's wireline division, which is moving away from slower DSL and cable connections and toward faster fibre networks. Its total number of broadband connections gained 0.6 percent on an annual basis to 15.5 million, and its subscriber base for fibre increased by 21% to 6.3 million.

Although those growth rates appear steady, the company's commercial wireline division has struggled, which it attributes to a backlog in government orders. They counteracted its consumer wireline business' expansion.

AT&T Earnings

AT&T reported second-quarter revenue of $29.64 billion, exceeding expectations, which were for $29.45 billion. Even so, the revenue was down 17% from the prior year. Additionally, the company's bottom line exceeded forecasts with EPS of 65 cents per share. However, this represented a year-over-year fall of 11%, which is not ideal.

Moreover, due to the WarnerMedia split, AT&T reduced its annual dividend by 46% to $1.11 per share. In spite of this, AT&T gives a dividend yield of 6%, which is very high in the current market.

According to the analyst in a report, In particular, management deferred to the board on any potential dividend growth, which is what they think to be the most important factor, refusing to commit to any future dividend-specific initiatives. High hopes exist for a small dividend rise, and share buybacks remain a possibility. Before year-end, analysts anticipate more clarity on this.

AT&T's Q2 earnings were a major factor in the stock's decline because the firm revised its forecast for free cash flow for the entire year. From a $16 billion range, AT&T reduced its full-year free cash flow projection to a range of $14 billion.

In spite of greater capital expenditures, Q2's free cash flow from continuing operations was $1.4 billion, according to the business. That fell short of the $4.62 billion in FCF consensus projection.

In addition, AT&T reported a gain of 813,000 postpaid wireless phone users versus projections of a gain of 562,000. In contrast to expectations of $19.7 billion, AT&T's wireless service revenue increased 5.2 percent to $19.9 billion.

The Future of AT&T

If you think that "Should I buy at&t stock or not?" then you must look into its future. On a pro forma basis, AT&T anticipated that its revenue would grow in the low single digits in 2022 and 2023. It anticipates that in both years, the broadband sector, which is being driven by the growth of its fibre networks, will develop more quickly than the wireless sector.

Additionally, AT&T anticipates that by the end of 2023, the ratio of net debt to adjusted EBITDA will have decreased from 3.1 at the start of 2021 to 2.5. It should be simpler to accomplish that goal now that DirecTV and WBD have been removed from its balance sheet.

Most of those long-term goals were restated by AT&T, which would make it more comparable to Verizon. On July 21, analysts anticipate AT&T (T) to release mixed financial results as increasing advertising expenses and inflationary pressures may have an impact on the company's bottom line. In fact, the business forewarned customers at the beginning of June that it might soon need to increase prices once more to combat inflation.

If the business produces higher-than-expected sales volumes, however, there may be a significant upside to the stock. Rollins anticipates that net extra postpaid phone subscribers could rise to a total of 600,000 for the quarter.

Is AT&T a Good Stock to Buy?

Investors also want to give priority to stocks that have recently had earnings and sales growth of at least 25%. T stock is currently far better in such position. So, it is a very good investment opportunity at this time.

Why AT&T a good stock to buy? The AT&T shares currently offereing a good dividend yield, thus, the stock is currently a good addition to your portfolio. Investors will need to look at the AT&T as the potential stock to buy.

Conclusion

When looking at the overall health of a company, a good way to determine that is by looking at the financial picture. AT&T (T)'s recent financial picture is not only important to the company but can also be reflective of the overall health of the market and economy. When stock markets become erratic, the telecom and media giant can be seen as a leading indicator of the direction the market is going.

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