AT&T Inc. (T) added 326,000 postpaid phone subscribers in the second quarter, nearly 60% lower than a year earlier. U.S. telecom market growth has slowed dramatically after the pandemic, and companies are offering cheaper plans to attract customers in the highly competitive market.
Moreover, the company is exploring options for DirecTV as Pay-TV Subscriptions continue to decline. DirecTV has been losing subscribers as it struggled to compete with streaming networks in recent years. It lost about 400,000 customers in the second quarter, bringing its total subscriber count to 12.4 million. This has also led to a drop in cash distribution that AT&T gets from DirecTV.
Moreover, the telecom giant is grappling with a considerable debt load. Despite aggressive efforts to pare down costs and attract subscribers via cost-effective plans, uncertainty looms heavily, and I believe this is not the right entry point in the stock. A closer look at some of its fundamental performance indicators may be insightful.
Analyzing AT&T's Performance between 2020 and 2023
The trend in the trailing-12-month net income of T has shown considerable fluctuation over the specifically recorded periods between 2020 and 2023. Starting at a negative $5.18 billion on December 31, 2020, and ending with a negative value of $8.77 billion as of June 30, 2023, AT&T's net income shows notable volatility:
- At the start of our series on December 31, 2020, T reported a net income of -$5.18 billion.
- On March 31, 2021, the net income was still negative at -$2.24 billion.
- Net income saw incremental improvement and remained negative at -$1.95 billion on June 30, 2021.
- The company experienced its first positive net income of $1.15 billion on September 30, 2021.
- AT&T's net income surged to $20.08 billion on December 31, 2021.
- The positive trend continued throughout early 2022, with net income being $17.34 billion on March 31, 2022, $19.93 billion on June 30, 2022, and $20.04 billion on September 30, 2022.
- The net income dropped sharply to -$8.52 billion on December 31, 2022, and continued to fall until it reached -$9.11 billion on March 31, 2023.
- At the end of our series, on June 30, 2023, AT&T's net income was -$8.77 billion.
More emphasis should be placed on the more recent data and last values in the series. From December 2021 to September 2022, AT&T experienced an optimistic streak in its net income, reaching as high as $20.04 billion. However, from December 2022 onward, the trend turned negative once more, with June 2023 seeing a net income of -$8.77 billion. These fluctuations result in an overall negative growth rate, with the company's net income dropping from -$5.18 billion in December 2020 to -$8.77 billion in June 2023.
The trailing-12-month revenue of T demonstrated a fluctuating behavior over the past few years as follows:
- As of December 31, 2020, the revenue was $171.76 billion.
- Revenue slightly increased to $172.92 billion by the end of the first quarter in 2021(March 31, 2021).
- By June 2021, it jumped to $176.01 billion.
- A slight drop was noted on September 30, 2021, with revenue being $173.59 billion.
- By the end of 2021 (December 31), revenue dropped further to $168.86 billion.
- In 2022, a downward trend was more obvious, with revenue recorded at $163.03 billion by March 31, $148.63 billion by June 30, and significantly dropping to $138.75 billion by September 30. The year ended with an even lower revenue, dramatically declining to $120.74 billion.
- In 2023, a minimal upward trend was observed, with revenue slightly increasing to $121.17 billion by March 31 and further to $121.44 billion by the end of the second quarter (June 30, 2023).
Taking into account the data provided from December 2020 to June 2023, there seems to be a general declining trend in the company's revenue over this period. The growth rate, calculated as the ratio between the last value ($121.44 billion in June 2023) and the first value ($171.76 billion in December 2020), indicates a substantial overall decrease in revenue.
The series represents the trend and fluctuations of T’s Return on Assets (ROA) from December 2020 to June 2023. Here are the key takeaways from this series:
- From December 2020 to September 2022, T's ROA showed a significant improving trend from -0.01 to 0.04. This period marked a consistent recovery in asset profitability.
- The three quarters of 2021 saw negative ROA values, with the least being -0.01 in December 2020. However, the situation improved starting from the last quarter of 2021, which ended at a positive 0.036.
- This upward trend continued in 2022, coming to a peak in September with a value of 0.04. Unfortunately, this was followed by a sharp decline to -0.019 in December 2022, indicating an adverse turn in profitability.
- Unfortunately, the negative trend persisted into 2023 through the first half, with small fluctuations between -0.022 and -0.019, staying in the negativity territory.
Altogether, the difference in the ROA between the first and latest available points shows a growth rate of -120%, indicating a significant reversal of the profitability trend from the highest point recorded in September 2022. Please note that these points emphasize more recent data in accordance with the request.
The Current Ratio of T has experienced several fluctuations over the course of approximately three years, from December 2020 to June 2023.
- There was a decrease in Current Ratio from 0.82 (December 2020) to 0.701 (September 2021) and remained constant at 0.701 through December 2021.
- It then increased briefly to 0.932 by March 2022 before dropping to 0.701 again by June of that year.
- A continued decline is observed from September 2022 to March 2023, reaching as low as 0.514.
- In the last recorded date in this series (June 2023), AT&T's Current Ratio increased to 0.677.
Focusing on the most recent data (2023), it can be seen that the AT&T's Current Ratio underwent a sharp drop by March 2023 but recovered somewhat by June 2023. It's also important to note the considerable increase in the Current Ratio in March 2022 (0.932), followed by a significant decrease in subsequent months. From the very first recorded value (0.82 in December 2020) to the last recorded value (0.677 in June 2023), this corresponds to a decrease of about 17%. These fluctuations indicate an inconsistency in the company's ability to cover its short-term liabilities with its short-term assets.
The data provided represents the Dividend Per Share (DPS) of T over a period from December 31, 2020, through to June 30, 2023. Here is a summary of the trend and occasional fluctuations within this time frame:
- The DPS started at $2.08 on December 31, 2020, and maintained the same figure until the end of 2021.
- A significant decreasing trend began in the first quarter of 2022, with the DPS changing to $1.838 on March 31, 2022. This trend continued throughout the year, decreasing quarterly. The DPS value at the end of 2022 stood at $1.11.
- This figure remained stable in the first half of 2023, which is the latest data available.
Looking at the initial and final DPS values, there has been a reduction from $2.08 in 2020 to $1.11 in 2023, according to the most recent data. Hence, the calculated growth rate (as a decline in this case) is approximately -46.63% over this period. Overall, in the latter parts of the series, AT&T registered notable declines in their DPS figures, particularly during 2022. This downward trend became more steady in the first half of 2023, with DPS maintaining at $1.11.
Analyzing AT&T's Share Price Fluctuations: A Six-Month Review (April-October 2023)
From the provided data on the share prices of T, it can be seen that:
- On April 14, 2023, the share price was $19.77
- The share price experienced a general downwards trend for the next two months until June 2, 2023, when it reached a low of $15.57.
- In the week following June 2, the price slightly increased to $15.78 on June 9, 2023, but it fluctuated around the same price range throughout June 2023.
- The share price continued to slide down further in July, reaching a low of $14.23 on July 21, 2023.
- After this point, there was a minor recovery as the price went up to $14.75 by July 28, 2023.
- Share prices remained quite stable around the mid $14 range through August 2023.
- Finally, in September, the share prices started a slow increase, reaching a high of $15.27 on September 22, 2023, before falling again to $14.69 by October 4, 2023.
Overall, AT&T's share price demonstrated a noticeable decline from $19.77 to $14.69 between April and October 2023 with some relative stability in-between and minor recovery periods. The growth rate was negative and decelerating initially but transitioned to slight accelerations during minor recoveries. Here is a chart of T's price over the past 180 days.
AT&T's Noteworthy Performance: Analyzing Growth, Value, and Momentum
T has an overall C rating, translating to a Neutral in our POWR Ratings system. It is ranked #8 out of the 18 stocks in the Telecom - Domestic category.
Upon examining the POWR Ratings for T, the three dimensions with the most noteworthy figures are Growth, Value, and Momentum.
- Growth: This dimension reflects AT&T's potential for financial growth. The Growth rating for AT&T begins at 74 in April 2023, then rises to 84 in May before gradually descending to 61 by October of the same year. Despite the descending trend from May, Growth remains one of the higher-rated aspects for AT&T.
- Value: This dimension is a measure of AT&T's current worth relative to its price. It shows an overall upward trend for AT&T, starting at 51 in April 2023 and climbing to a peak of 68 by August. After this peak, it slightly reduces but still stays reasonably robust, closing at 62 in October.
- Momentum: This represents the pace at which the asset value of AT&T is rising or falling for a set period. This category witnessed fairly volatile rates during the examined period. It starts at 31 in April 2023, drops to 9 in June, then noticeably rebounds to 63 by September, demonstrating a clear fluctuating pattern.
Each dimension caters to a different aspect of AT&T's performance over time, giving a comprehensive view of its current standing and future potential.
How does AT&T Inc. (T) Stack Up Against its Peers?
Other stocks in the Telecom - Domestic sector that may be worth considering are Ooma Inc. (OOMA), Spok Holdings Inc. (SPOK), and IDT Corporation (IDT) -- they have better POWR Ratings.
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
T shares were trading at $14.81 per share on Thursday afternoon, up $0.16 (+1.09%). Year-to-date, T has declined -15.76%, versus a 12.22% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
Should Investors Avoid Investing in AT&T (T) Right Now? StockNews.com
