AT&T Earnings Preview

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AT&T (NYS: T) beat estimates by $0.01 last quarter and investors are hoping it can beat them again. The company will unveil its latest earnings on Thursday, Oct. 20. AT&T is a holding company whose subsidiaries and affiliates provide wireless and wireline telecommunications services and products to consumers and businesses worldwide. It also provides directory advertising and publishing services in the United States and international markets.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back AT&T, with 13 of 25 rating it a buy and the remainder rating it a hold. Analysts like AT&T better than competitor Verizon Communications overall. While analysts still rate the stock a moderate buy, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $31.62 billion in revenue this quarter. That would represent a rise of 0.1% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.61 per share. Estimates range from $0.56 to $0.63.

What our community says:
CAPS All-Stars are solidly behind the stock with 95.1% giving it an "outperform" rating. The community at large backs the All-Stars with 92.4% awarding it a rating of "outperform." Fools are keen on AT&T and haven't been shy with their opinions lately, logging 1,713 posts in the past 30 days. Despite the majority sentiment in favor of AT&T, the stock has a middling CAPS rating of three out of five stars.

Management:
AT&T's profit has risen year over year by an average of 61.9% over the past five quarters. Revenue has now gone up for three straight quarters. The company's gross margin shrank by 2.1 percentage points in the last quarter. Revenue rose 2.2% while cost of sales rose 7.7% to $13.33 billion from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

57.7%

57.1%

55.3%

57.2%

Operating Margin

19.6%

18.6%

6.3%

17.3%

Net Margin

11.4%

10.9%

3.3%

39.1%

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Motley Fool newsletter services have recommended buying shares of AT&T.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

At the time this article was published

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