Over the very long term it has, but investors should keep their expectations in check.In this video, Motley Fool contributor Jason Hall explains why AT&T (T 1.90%), after a great 19 month run, isn't likely to outperform the market going forward.*Stock prices used were from the afternoon of Feb 28, 2025. The video was published on March 3, 2025. ...

Group 1 - The company has shifted its stance on AT&T from sell calls to buy recommendations as the stock price fluctuated, indicating a strategic approach to investment based on market conditions [1] - The investment strategy includes a blended trading and income approach aimed at maximizing returns and advancing savings and retirement timelines [1] - The company emphasizes its ability to adapt in a volatile market influenced by inflation and tariffs, focusing on high-conviction investment ideas [2] Group 2 - The company has a proven track record and invites potential clients to try their services with a money-back guarantee if not satisfied [2]

Company Performance - AT&T's stock closed at $26.90, showing a +1.24% increase from the previous day's closing price, outperforming the S&P 500 which fell by 1.59% [1] - Over the past month, AT&T shares have gained 9.66%, surpassing the Computer and Technology sector's decline of 4.81% and the S&P 500's loss of 2.23% [2] Upcoming Earnings - The upcoming earnings per share (EPS) for AT&T is projected at $0.52, reflecting a 5.45% decrease compared to the same quarter last year [3] - Revenue is expected to reach $30.55 billion, indicating a 1.75% growth year-over-year [3] - For the full year, analysts anticipate earnings of $2.14 per share and revenue of $124.19 billion, representing changes of -5.31% and +1.52% respectively from the previous year [4] Analyst Estimates - Recent revisions in analyst estimates suggest a positive outlook for AT&T's business performance and profit potential [4] - The Zacks Consensus EPS estimate has increased by 5.77% over the past month, and AT&T currently holds a Zacks Rank of 3 (Hold) [6] Valuation Metrics - AT&T's Forward P/E ratio stands at 12.44, which is lower than the industry's Forward P/E of 17.93, indicating a valuation discount [7] - The company has a PEG ratio of 3.05, aligning with the average PEG ratio of the Wireless National industry [8] Industry Context - The Wireless National industry is part of the Computer and Technology sector and holds a Zacks Industry Rank of 24, placing it in the top 10% of over 250 industries [9]

Group 1 - AT&T has achieved a total return of 43%, significantly outperforming the market return of 7.4%, reinforcing the positive outlook on the company's turnaround potential [1] - The company's long-term growth is driven by its expansion in 5G and fiber services, indicating strong future potential [1] - The investment strategy focuses on GARP/Value stocks, emphasizing high-quality, reasonably priced businesses with strong competitive advantages and significant growth potential [1] Group 2 - The investment approach prioritizes fundamental analysis, seeking stocks that are trading at a discount to their intrinsic value, with a clear margin of safety [1] - The long-term investment horizon is set at 5-7 years, aiming for wealth accumulation through compounding while also emphasizing downside protection [1]

Core Viewpoint - AT&T has shown solid performance in its recent earnings report, with adjusted earnings and revenues exceeding expectations, driven by strong subscriber growth and a resilient business model [2][3][4]. Financial Performance - For Q4 2024, AT&T reported a net income of $4.03 billion or 56 cents per share, a significant increase from $2.13 billion or 30 cents per share in the previous year, primarily due to higher contributions from DIRECTV investments [3]. - The company's GAAP operating revenues for Q4 increased by 0.9% year over year to $32.3 billion, surpassing the consensus estimate of $32.29 billion [5]. - For the full year 2024, AT&T's net income was $10.75 billion or $1.49 per share, down from $14.19 billion or $1.97 per share in 2023, attributed to higher asset impairment and restructuring charges [4]. Subscriber Growth - AT&T experienced strong subscriber momentum with 839,000 post-paid net additions, including 482,000 postpaid wireless phone additions, and a postpaid churn rate of 0.85% [7]. - The average revenue per user (ARPU) for postpaid phone-only customers increased by 1.9% year over year to $56.72 [7]. Segment Performance - In the Communications segment, total operating revenues rose to $31.14 billion, driven by a 3.3% increase in Mobility revenues to $23.13 billion and a 3.4% increase in Consumer Wireline revenues to $3.46 billion [8]. - Revenues from the Business Wireline segment declined by 10% to $4.54 billion due to lower demand for legacy services [10]. Cash Flow and Liquidity - For 2024, AT&T generated $38.77 billion in cash from operations, slightly up from $38.31 billion in 2023, while free cash flow for the quarter was $4.8 billion, down from $6.4 billion in the previous year [12]. - As of December 31, 2024, AT&T had $3.3 billion in cash and cash equivalents and long-term debt of $118.4 billion [12]. Future Guidance - AT&T aims to enhance operational efficiencies while focusing on 5G and fiber connectivity, expecting wireless service revenues to grow by 2-3% in 2025 and broadband revenues to increase in the mid-teens [13]. - Adjusted earnings for 2025 are projected to be between $1.97 and $2.07 per share, with free cash flow expected to exceed $16 billion [14]. Market Position - AT&T's stock has shown an upward trend in estimates, with a Zacks Rank of 3 (Hold), indicating an expectation of in-line returns in the coming months [17]. - The company is positioned within the Zacks Wireless National industry, where competitors like Verizon have also shown positive performance [18].

Core Viewpoint - AT&T has significantly outperformed the market with total returns exceeding 63% over the past year, contrasting with the S&P 500's 24% increase, indicating that strong investment returns can arise from unexpected sources [2][4]. Financial Performance - AT&T's recent success is attributed to its financial improvements after a decade of challenges, including a substantial reduction in debt from approximately $200 billion in 2022 to $123 billion [3][4]. - The company's P/E ratio has improved from a low of 5.4 in 2022 to over 12 times the 2025 earnings estimates, reflecting enhanced market sentiment [4][10]. Dividend and Cash Flow - AT&T maintains a dividend payout ratio of about 44% of its free cash flow, which was $18.5 billion over the past four quarters, allowing for continued debt repayment and a dividend yield of over 4.2% [5][9]. - The company is popular among income-focused investors, particularly retirees, due to its consistent dividend payments [6]. Growth Prospects - Despite recent gains, AT&T's growth remains modest, with a 3.3% year-over-year revenue increase in its core wireless business and total revenue growth of only 0.9% [7]. - Analysts project an average earnings growth of just 4% annually over the next three to five years, indicating limited growth potential [7]. Market Sentiment and Valuation - The stock's rally is largely attributed to an overly depressed valuation rather than strong growth fundamentals [8]. - With a current P/E ratio of about 12, the stock is considered fairly valued for a business with low-single-digit earnings growth, suggesting potential overvaluation if the price continues to rise [10]. Investment Outlook - AT&T is now viewed as a hold, as the stock may not present compelling value for bargain hunters, and dividend investors might find better yields elsewhere [11].

Core Points - Cameron John Wagenius pleaded guilty to hacking AT&T and Verizon, stealing a significant amount of phone records from these companies [1][2] - The hacking incidents are linked to broader data breaches involving multiple companies, including Snowflake, indicating a larger trend of cyber threats in the telecommunications and cloud computing sectors [3][5] Group 1: Legal Proceedings - Wagenius faces two counts of "unlawful transfer of confidential phone records information," with potential penalties including a maximum fine of $250,000 and up to ten years in prison for each count [2] - The U.S. government has connected Wagenius's charges to the indictment of other alleged hackers, suggesting a coordinated effort in the cyberattacks [3] Group 2: Impact on Companies - The breaches at AT&T and Verizon are part of a larger pattern of cyber intrusions that have affected at least 160 companies, including major firms like LendingTree, Santander Bank, and Ticketmaster [5] - U.S. attorney Tessa Gorman indicated that the breaches share overlapping evidence and legal questions, highlighting the interconnected nature of these cyber incidents [4]

Core Insights - AT&T will host a series of fireside chats featuring CEO John Stankey and CFO Pascal Desroches, which will be webcast live and available for replay [3][7] - The events are scheduled for the Barclays Communication and Content Symposium on February 25, the Morgan Stanley Technology, Media & Telecom Conference on March 4, and the Deutsche Bank Media, Internet & Telecom Conference on March 11 [7] Company Information - AT&T serves over 100 million U.S. families and nearly 2.5 million businesses, providing services from traditional phone calls to advanced 5G wireless and multi-gig internet offerings [6] - The company is on track to meet its 2025 and multi-year financial and operational guidance as shared during its fourth quarter 2024 earnings call and 2024 Analyst & Investor Day [7]

Core Points - AT&T has elected John Stankey as the new Board Chair, succeeding William E. Kennard, who will take on the role of Lead Independent Director [1][2] - The change in leadership is part of AT&T's three-year strategic and capital allocation plan, aimed at enhancing governance agility and long-term shareholder value [2] Company Overview - AT&T serves over 100 million U.S. families and nearly 2.5 million businesses, providing services from traditional phone calls to advanced 5G wireless and multi-gig internet offerings [3]

Subscriber and Customer Base - AT&T served 118 million Mobility subscribers as of December 31, 2024, including 89 million postpaid, 19 million prepaid, and 10 million through resellers[33]. - The Consumer Wireline business unit serves approximately 14.1 million customers, including 9.3 million fiber broadband subscribers as of December 31, 2024[41]. - AT&T provides postpaid and prepaid wireless services to approximately 24 million subscribers in Mexico[46]. - AT&T had over 9.3 million fiber consumer wireline broadband customers, adding 1.0 million during 2024[30]. - AT&T had 15.3 million broadband connections at the end of 2024, compared to 15.1 million in the prior year[30]. Financial Performance - The Communications segment provided approximately 97% of 2024 segment operating revenues, accounting for substantially all of the total segment operating income[33]. - Wireless service accounted for 53% of total consolidated operating revenues in 2024, up from 52% in 2023 and 50% in 2022[49]. - The Latin America segment contributed approximately 3% to total segment operating revenues in 2024, with less than 1% of total segment operating income[45]. - The percentage of total consolidated operating revenues from business services decreased to 15% in 2024 from 17% in 2023[49]. - Research and development expenses were $955 million in 2024, slightly up from $954 million in 2023, but down from $1,236 million in 2022[63]. Network and Technology - The company plans for about 70% of its wireless network traffic to flow across open-capable platforms by late 2026, enhancing operational efficiencies[25]. - AT&T's network covers over 440 million people with 4G LTE and over 314 million with 5G technology in North America[29]. - The deployment of 5G technology is expected to enable massive deployment of devices connected to the internet, enhancing data service delivery[26]. - The company expects to continue investing significantly in expanding network capacity and obtaining additional spectrum to support long-term needs[27]. - AT&T agreed to purchase select spectrum licenses from United States Cellular Corporation for approximately $1,000 million, subject to closing conditions[28]. Operational Changes - The company is actively working to exit legacy copper network operations, reducing network access lines in service from 4.2 million to 3.3 million year-over-year[31]. - The company aims to capitalize on the growing demand for broadband driven by streaming, augmented reality, and AI technologies[24]. - The company is experiencing increasing demand for high-speed broadband services due to changes in video viewing preferences and remote learning trends[41]. Competition and Market Position - The company continues to face substantial competition in its wireless businesses from both traditional and nontraditional competitors[58]. - AT&T faces substantial competition in its wireless business, particularly from América Móvil in Mexico[59]. Employee and Labor Relations - The company employed approximately 140,990 persons as of December 31, 2024[64]. - The main labor contract covering about 9,000 employees is set to expire in April 2025[66]. - The company is committed to pay equity and competitive benefit programs for its employees[68]. - No single customer accounted for 10% or more of consolidated revenues in 2024, 2023, or 2022[57].