AT&T (T) Up 9.2% Since Last Earnings Report: Can It Continue?

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].