Is Former Dividend Aristocrat AT&T a Buy After Q2 Earnings?

Core Viewpoint - The communication services sector, including AT&T, is performing strongly in 2025, with AT&T's stock rising over 19% and the sector gaining 11.41% compared to the S&P 500's 7.28% gain [1][2]. Financial Performance - AT&T reported Q2 EPS of 54 cents, exceeding the consensus estimate of 51 cents, resulting in a trailing 12-month P/E ratio of 16.79 [2]. - The company expects earnings to grow by 6.07% next year, from an annualized $2.14 per share to $2.27 per share, with a forward P/E ratio of 13.30, indicating a 20.78% improvement [3]. - Q2 revenues were $30.8 billion, up from $29.8 billion in Q2 2024, with net income of $4.9 billion compared to $3.9 billion in the same period [4]. Business Segments - Mobility service revenues increased by 3.5% year-over-year to $16.9 billion, while consumer fiber broadband revenues rose by 18.9% year-over-year to $2.1 billion [4][5]. - The company added 401,000 postpaid phone subscribers, 243,000 AT&T Fiber subscribers, and 203,000 AT&T Internet Air subscribers in Q2 [5]. Shareholder Returns - AT&T repurchased approximately $1 billion of its common shares as part of a $10 billion share repurchase authorization [5]. - The company maintains a dividend yield of 4.06%, with an annual dividend of $1.11 per share and a payout ratio of 68.10% [7]. Market Position and Competition - AT&T is the third-largest wireless provider in the U.S., with a communications infrastructure reaching 290 million people across approximately 24,000 cities and towns [10]. - The company has invested over $145 billion in network buildout since 2019, enhancing its competitive position against rivals like T-Mobile and Verizon [10][9]. Analyst Ratings and Price Target - Analysts have a consensus Moderate Buy rating for AT&T, with 18 out of 25 analysts assigning a Buy rating and an average price target of $29.17, indicating a potential upside of 6.04% [11].